Alibaba Group (BABA) seems to be scaling back on its Metaverse operations in a move to withdraw from what was once an intensely popular sector. According to an exclusive report by the South China Morning Post, the Chinese e-commerce giant is laying off dozens of employees at Yuanjing, Alibaba’s dedicated metaverse unit.
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The report stated that this restructuring aims to boost organizational efficiency and will affect employees working at the company’s Yuanjing offices in both Shanghai and Hangzhou. Furthermore, Yuanjing, which had attracted investments amounting to “billions of yuan,” will continue to operate but with a revised focus. In addition, the report stated that despite the layoffs, Yuanjing will continue to develop metaverse applications, tools, and services for its customers.
BABA Established Yuanjing in 2021
BABA’s Metaverse unit, Yuanjing, was established in 2021, at a time when the buzz around the metaverse was at its peak. Alibaba’s metaverse initiatives included investing around $60 million in Nreal, a Chinese augmented reality (AR) glasses manufacturer. AR, along with virtual reality (VR) and mixed reality (MR), was widely regarded as important for accessing metaverse platforms.
Meanwhile, Yuanjing created a cloud-based operating system to support metaverse applications, particularly in video gaming and various industrial sectors. This development indicated that Alibaba was initially focused on Yuanjing to expand the capabilities and uses of metaverse technologies.
Is BABA Stock a Good Buy?
Analysts remain bullish about BABA stock, with a Strong Buy consensus rating based on 16 Buys and three Holds. Over the past year, BABA has increased by more than 15%, and the average BABA price target of $125.11 implies an upside potential of 26.3% from current levels.
