It is incredible! Japan's SoftBank Group, Alibaba's most important investor, officially announced that it has once again reduced its stake in Alibaba by a large amount, making a profit of more than 60 billion yuan! What signal does this release?
Recently, SoftBank Group officially announced that its wholly-owned subsidiaries reduced their holdings of 512.3 million shares of Alibaba by signing prepaid forward contracts for physical settlement, and the estimated income from investment securities is as high as 1,259.2 billion yen, equivalent to about 61.1 billion yuan. A reduction in holdings earned more than 60 billion yuan, which is really a doubling of profits. So the question is, why did SoftBank suddenly want to reduce its stake in Alibaba again at this time? What is the reason? What is the signal?
In my opinion, there are several reasons for this.
First, Alibaba's future prospects are not optimistic. This can be seen from Alibaba's stock price trend in recent years, Alibaba's share price has fallen from a peak of 318 yuan in October 2020 to 73 yuan today, a drop of 77%. The market value has fallen by more than three-quarters. The share price reflects the value of the company and its future growth. If the company's future prospects are good and its profitability is strong, the stock price will rise in advance, reflecting the company's expectation of future value. On the contrary, the decline in the stock price means that the future value of the company is not optimistic. Why are funds so unoptimistic about Alibaba, in essence, Alibaba's strategy does not match the trend of China's economy behind it.
Since Daniel Zhang came to power, Ali has focused its strategy on Tmall, concentrating manpower, material and financial resources to vigorously develop Tmall. And Taobao, which Alibaba relied on to make its fortune in the early stage, feels like it is leaving it to fend for itself. Tmall, on the other hand, focuses on high-end, and almost all of them are flagship stores for various products. Although they are all genuine, the price is much higher. If there was no sudden mask incident in 2020 and China's economy was not frustrated, then Tmall would have been a great success. But at the beginning of 2020, the mask incident happened, and everyone should be very clear about what happened next. Population movement is restricted, and in some places the economy may be halted at every turn. In such an environment, many enterprises and physical stores have been greatly affected, which has also deeply affected the employment and income of ordinary people.
When people have no money in their pockets, they naturally can't spend as lavishly as before, so they can only choose to consume at a low price and consume cautiously. In the past, it was Tmall flagship store shopping, but now you can only go to Pinduoduo, Douyin live broadcast room and other platforms with strong discounts. This will inevitably lead to a decline in sales on Tmall, and finally a decline in Alibaba's profitability. Let's take a screenshot to see Ali's financial reports in recent years, it is clear that 2020 and 2021 are the highest points of net profit, and then they took a sharp turn. And the stock price reflects expectations, so it is understandable that it has fallen so much. Therefore, as long as China's economy does not improve and the essence of the people's consumption downgrade does not change, Ali's Tmall-based pattern strategy will inevitably be difficult to change. This is one of them.
Second, the deterioration of relations between China and Japan. The relationship between China and Japan has obviously deteriorated over the years, especially the discharge of nuclear wastewater in Japan, and the formation of the Four Eyes Alliance with the United States to block the rise of China's semiconductor technology. Relations between China and Japan should have fallen to a recent low. As a result, the number of Japanese in China has fallen to a new low in nearly 20 years, and the investment of Japanese companies in China has also decreased significantly. This is the second reason.
Third, Japan's SoftBank Group is short of money. This should be a short-term direct factor for Japan's SoftBank Group to quickly sell Alibaba shares to recoup funds. Japan's SoftBank Group has suffered huge losses due to investment mistakes over the years. For example, in 2021, it had a net loss of 1.7 trillion yen, and in 2022, it lost more than 970 billion yen. In the first half of fiscal 2023, the net loss reached 1.41 trillion yen. So this obviously shows that Japan's SoftBank is very short of money. Therefore, reducing the stake in Alibaba and returning funds to find new investment points has become a direct short-term stimulus point.