Stocks

Alibaba Group Holding Ltd Is Up Over 107%, While Alibaba Pictures Is Down 8%

Alibaba Pictures Group could be one division that founder Jack Ma may not be very proud of right now. At a time when Ma’s flagship firm is up about 107% this year, the loss-making film and TV business is down about 8% for the same period.

Alibaba Pictures
By Charliepug (Own work) [CC BY-SA 4.0], via Wikimedia Commons

Alibaba Pictures – is it in trouble?

Alibaba Pictures Group operates an online cinema ticket venture and invests in Chinese and foreign movies. Over the past week, its shares were down about 10% in Hong Kong, the lowest since March 2014, according to Bloomberg. The drop is despite the fact that Ma made his film debut with a 20-minute short from Alibaba Pictures. The film, based on martial arts, released on Nov. 11.

The drop in the Alibaba Pictures stock could be attributed to recent management changes in Alibaba Group’s culture and entertainment unit, according to Bloomberg.  In five of the past six half-yearly earnings reports, Alibaba Pictures has posted losses.

For the six months ending in June, Alibaba Pictures posted a loss of $83.7 million, attributing it to foreign exchange movements and cost of subsidies to create a market position for Tao Piao Piao, its internet-based promotion and distribution business. However, revenue nearly quadrupled to $158 million. The surge in revenue was backed by the increased contribution from Tao Piao Piao. Alibaba’s Tao Piao Piao, with its online ticketing and seat selection services, covers over 97% of the country’s total box office sales.

Alibaba Pictures sees itself more as a technology platform and services provider than a film producer or rights owner. At the time, Alibaba Pictures chairman, Yu Yongfu said, “Having laid the foundation for its core business segments over the last two years, the group is expected to advance to a new phase of development.”

Bloomberg, however, predicts a further drop in the stock. Citing a technical indicator “Death Cross,” which the stock formed last month, Bloomberg says it is “an ominously named technical move that signals further equity declines could be imminent.”

Management changes

In separate news related to Alibaba Pictures, Yu Yongfu will step down as chairman of Alibaba’s Digital Entertainment Group. From December, Yu will lead the Electronic World Trade Platform (eWTP) within Alibaba. eWTP is a strategic initiative by Alibaba founder Jack Ma to expand the operations beyond China, according to Variety.

“Yu has surprised us with his excellent leadership in promoting the strategy and business consolidation of the entertainment division,” Alibaba CEO, Daniel Zhang, said internally, according to Variety. “We believe he will give us another surprise in building the global investment system.”

Previously, Yu stepped down from Alibaba Pictures as well to make way for Fan Luyuan. The Digital Entertainment Group includes both Alibaba Pictures and the Youku Tudou video streaming and production operation. According to Variety, the chairmanship of the Digital Entertainment Group will keep rotating from now on. Yang Weidong, head of Youku Tudou and Alibaba’s music operations, would be the first rotating chairman.

On Wednesday, Alibaba shares closed down 0.17% at $181.48. Year to date, the stock is up almost 107%, while in the last one month, it is up almost 2%.