Alibaba eyes dual primary as Amazon raises Prime

Things are turning sour for Alibaba in the US: its blockbuster listing there in 2014 could now become a liability, while it is struggling to make ecommerce inroads with American businesses.

It has hardly been easier for it in China under a tech crackdown by the government, but today it reached out to private investors there, with its board authorising management to apply for a primary listing on the Hong Kong Stock Exchange. The process is expected to be completed by the end of the year.

At present, it has a secondary listing, but the move will mean a dual-primary listing, alongside its New York one. Having a primary listing in Hong Kong is a requirement for the city’s Stock Connect programme, which allows mainland Chinese investors to trade in a company’s shares. It would also leave it in a better position if it has to delist in the US because of tougher auditing requirements.

“It’s a very smart move . . . even if they’re delisted in the US they still have a back-up plan,” said Dickie Wong, head of research at Kingston Securities.

Lex says mainland retail investors have historically been exuberant buyers of stocks that are household names. They are a formidable force in Chinese investment, accounting for around 85 per cent of daily turnover. They should provide significant underpinning to Alibaba shares. The stock has fallen two-thirds from its 2020 peak, trading at just 14 times forward earnings. That is less than a fifth of the valuation of Amazon.

Cristina Criddle reports today that Alibaba’s push to rival Amazon by bringing US businesses on to its ecommerce platform has struggled to meet its targets.

The group launched Alibaba.com, its business-to-business ecommerce website, in the US three years ago with the aim of signing up more than 1mn local businesses and competing globally with the likes of Amazon, which has a similar platform for wholesalers.

However, the majority of US sellers cancel their subscriptions after a year, according to past and current employees, and that 1m target has been slashed to just 2,000 each year, we understand.

Meanwhile, Amazon’s European users may be cancelling subscriptions after it announced an increase to the cost of its entertainment and free delivery service from September 15, following the 17 per cent price raise for Prime in the US in February.

In Germany, Amazon’s biggest market outside of the US, membership costs will increase 30 per cent, while Prime members in France will pay 43 per cent more. For UK customers the price of an annual subscription will increase 20 per cent from £79 to £95 a year. A spokesperson attributed the move to “increased inflation and operating costs”.

The Internet of (Five) Things

1. Shopify lays off 1,000 employees
Shares in Shopify fell by more than 15 per cent on Tuesday after the Canadian ecommerce platform said it would lay off 10 per cent of its workforce. In a blog post explaining the move, the company’s chief executive, Tobias Lütke, said his belief that online shopping habits would endure post-pandemic had backfired: “Ultimately, placing this bet was my call to make and I got this wrong.”

2. PE brokers European software deal
France-based software group Cegid is acquiring Spanish rival Grupo Primavera in a €6.8bn deal that combines two private-equity backed companies that have each been formed through acquisition sprees. Cegid, is backed by Silver Lake, KKR and AltaOne Capital, while London-based Oakley Capital owns Grupo Primavera.

3. Tether’s loan recovery from Celsius examined
Stablecoin issuer Tether faces scrutiny over an $840mn loan it recovered from Celsius Network as the crypto lender’s bankruptcy tests how insolvency rules apply to digital assets.

4. Chinese former chip boss detained
Zhao Weiguo, the former head of an expansive Chinese conglomerate with state backing and deep investments in the global tech sector, has been placed under investigation by officials in Beijing, according to local media. The 54-year-old, who led cash-strapped chipmaking giant Tsinghua Unigroup for a decade, has been out of contact after being taken from his home by authorities in mid-July.

5. Tech bros prosper in New York
New York City’s tech sector is thriving, writes Josh Chaffin. But while Silicon Valley desires hardcore engineers, businesses in NYC have exploited the application of technology across sectors such as proptech, fintech and adtech.

Tech tools — Honor MagicBook 16

Honor’s MagicBook 16 is a premium laptop at a practical price (£850). With its solid aluminium body redolent of a MacBook, I found its backlit keyboard and trackpad also a match for experiences on Apple offerings. Speakers are unusually placed but effectively positioned to fire upwards from the left and right side of the keyboard, although bass is lacking. They also contain the fingerprint ID unit. The 16.1in screen is expansive and impressive. The AMD Ryzen 5000 series processor ensures great performance and the base model comes with 16GB of memory and a 512GB solid state drive. Battery life is average and adequate at around eight hours and there is a 720p HD webcam. All in all, the MagicBook is a very good value notebook that should stand the test of time.