Shares in Alibaba’s Hong Kong-based production arm Alibaba Pictures shot up 37% on Wednesday after its parent company announced it was considering an asset injection. The news that the e-commerce giant, which briefly enjoyed a higher market value than Walmart, was holding exploratory discussions with its production arm has reassured some that a solution to Alibaba Pictures’ financial struggles may be in sight.
“Alibaba Group has indicated that the possible business injection would be comprised of Alibaba Group’s (i) online movie ticketing business and (ii) financing and investment platform for the production of movies and other media content,” read the statement issued to the Hong Kong stock exchange by Alibaba. The statement goes on to say the company intends to create a “demand-driven entertainment experience” and “an integrated approach towards the funding, production, marketing and distribution of entertainment content.”
The statement also made clear that neither the terms any possible injection, or even if any injection would take place at all, had been agreed.
Alibaba Pictures was borne out of the acquisition of a majority 60% stake in by Jack Ma’s group in March 2014 for $800 million as the e-commerce entrepreneur sought to add as much value to his group as possible ahead of the ultimately blockbusting IPO last September. The newly-monikered company has gradually been working towards expanding its operations since its launch. In January, it announced it had brought on-board celebrated Hong Kong filmmaker Wong Kar Wai (In The Mood For Love) to produce its first film Bai Du Ren, written and directed by Zhang Jiajia and starring Wong Kar Wai regular Tony Leung (2046).
In March, Ma announced Alibaba had also acquired an 8.8% stake in Enlight, one of China’s leading film and TV production companies, valued at $380 million.
Alibaba Pictures’ increased share price leaves the company with a market cap of more than $10 billion. Trading in the company had been suspended March 24. The surge in its share price would seem to indicate investor confidence the company may be able now to turn an eventual profit with the extra backing. The company reported a loss of $53 million at the end of March.