China-based Alibaba Group Holding Limited (HK:9988) has again cut its stake in logistics services company GOGOX Holdings Limited (HK:2246) due to multiple challenges, including intense competition and regulatory headwinds. In the last few months, Alibaba has reduced its stake in GOGOX several times, bringing down its ownership from 12.23% in mid-2023 to 8.89% by December 2023.
The Alibaba share price is trading down by 3.31% today at the time of writing.
Alibaba Group is a Chinese conglomerate holding company specializing in various e-commerce, internet, and technology businesses.
What Made Alibaba Reduce its Stake in GOGOX?
The logistics company GOGOX has been facing fierce competition and regulatory challenges in mainland China, leading to financial losses. GOGOX is operating in a crowded space, especially after bigger names like Didi Chuxing have entered the logistics services market. As a result, experts believe that GOGOX needs to undertake some solid measures to trim its losses.
In the first half of 2023, it posted a loss of ¥642.5 million, down from ¥1.05 billion a year ago. The GOGOX share price has lost over 80% of its value in 2023.
Moreover, Alibaba’s stake reduction in GOGOX aligns with its broader corporate strategy to prepare for the IPO of its own logistics arm, Cainiao Smart Logistics Network. This will make it the company’s first unit to list separately as part of its restructuring efforts announced in 2023.
Are Alibaba Shares a Good Buy?
On TipRanks, 9988 stock has received a Strong Buy rating based on seven Buys and one Hold recommendation. The Alibaba share price target is HK$126.30, which shows a growth rate of 70.6% on the current trading price.
