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Alibaba co-founder criticizes company in internal memo

Alibaba Co-Founder Jack Ma (BABA), who stepped away from day-to-day operations of the company in 2020, surprised employees by replying to a staff post on Alibaba’s internal forum. Ma urged the company to go through a course correction, pointing towards, and praising, e-commerce competitor PDD Holdings Inc. (PDD). Yahoo Finance Anchors Seana Smith and Brad Smith break down the latest development with the company and what it means moving forward.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

SEANA SMITH: All right. Well, Jack Ma is reportedly calling for change at Alibaba. Now, in an internal memo confirmed by several reports, Ma urged the Chinese e-commerce giant to, quote, "correct its course, as up and coming rivals like PDD, Pinduoduo, and ByteDance threaten its dominance in the online retail space. Ma also called AI a big opportunity for e-commerce. He co-founded Alibaba years ago and has largely stayed away from the company's day to day operations over the last three years.

Now we know Alibaba shares have been under some pressure this year with the stock off just about 13% since January 1. But looking back to the high levels that we saw during COVID, we are well off of those high levels. So of course, the question for Alibaba is what exactly the direction looks like of this company going forward.

We know Alibaba recently shelved the plans to spin off and list its $11 billion cloud arm. We have new leadership at Alibaba. So exactly where they are or how they are steering the company I think is a big question mark here for investors, for analysts at this point.

But I mentioned there, the Pinduoduo and also ByteDance, obviously more pressure here from some of the rivals out there, stronger competition, and then also just the weaker recovery that we're seeing take place in China. Just among the challenges that are up against Alibaba and some of its competitors as well right now.

BRAD SMITH: Yeah, that doubling of revenue that Pinduoduo was able to see certainly catching some of the eyes over internally at Alibaba. And none more so than Jack Ma here specifically, the co-founder over at Alibaba.

But now when you think about the new leadership team and how they're thinking about these individual units that still are set to spin off, that's going to be a larger concern I think for investors to figure out, OK, what are the actual parts that will still be remaining together at the end of the day? Where are those margins going to be generated from? And where does that trigger some reinvestment into the business more long term as well?