On December 15th local time, the US Securities and Exchange Commission (SEC) announced that Taobao China Holding Limited, a subsidiary of Alibaba, plans to sell 25 million shares of Xiaopeng Motors' ADRs (American Depositary Shares), with a total value of approximately $391 million (approximately RMB 2.78 billion). Alibaba's stake in Xiaopeng will decrease from 10.2% to 7.5%.
The announcement shows that the 25 million shares to be sold were purchased by Taobao China on September 12, 2019, before Xiaopeng Motors went public in the United States. It is reported that since its establishment in 2014, Alibaba has been a staunch investor of Xiaopeng Motors, participating in multiple rounds of financing for Xiaopeng Motors.
Faced with the huge impact of the news on stock prices, Alibaba and Xiaopeng Motors have responded one after another.
Alibaba stated, "We have sold some of our shares in Xiaopeng based on our capital management goals, reducing our holdings from 10.2% to 7.5%. Xiaopeng is one of the leaders in China's electric vehicle industry, and we have established a strategic partnership with it. We believe in Xiaopeng's future and look forward to continued cooperation with the company."
Since the beginning of this year, "reducing holdings" has become a frequent term on Alibaba. At the quarterly performance conference call on November 16th, the management of Alibaba Group stated that they will continue to optimize capital management, increase return on capital, and enhance shareholder value in the future.
Regarding this matter, Xiaopeng Motors stated that "Alibaba's reduction in holdings is a strategy of implementing the investment realization return shareholders communicated in its third quarter report, rather than due to a change in views on Xiaopeng Company. Alibaba will continue to be Xiaopeng's second largest shareholder, holding about 8% of the shares, and will continue to engage in deep strategic cooperation with Xiaopeng Motors in areas such as cloud computing." Xiaopeng Motors also emphasized that the company has established strategic cooperation with Volkswagen this year, Volkswagen is currently the third largest shareholder of Xiaopeng. Xiaopeng currently has over 40 billion yuan in cash on hand, with a positive free cash flow of several billion yuan in the second half of the year, indicating abundant cash and a significant improvement in cash flow.
The third quarter financial report of this year shows that Xiaopeng Motors delivered 40008 vehicles in the third quarter, an increase of 72.4% compared to the previous quarter. Xiaopeng Automobile's total revenue in the third quarter was 8.53 billion yuan, an increase of 25.0% year-on-year and 68.5% month on month; The sales revenue of automobiles was 7.84 billion yuan, an increase of 25.7% year-on-year and 77.3% month on month.
According to this news, on December 16th, the US stock market of Xiaopeng Motors closed down 7.54%, with an intraday decline of over 8.5%.