When things are going badly for you, the last thing you want to hear is a neighbor talking about how well they're doing. That's roughly the situation Alibaba finds itself in with respect to Chinese internet peer PDD Holdings.
Alibaba is struggling to reassure investors about its strategy after dramatically abandoning a plan to spin off its cloud unit, apparently hit by U.S. controls on chip exports.
Alibaba ADRs were down 2.7% on Wednesday.
Meanwhile, PDD, the owner of the Pinduoduo and Temu retail platforms, is wowing investors with its strong revenue growth, especially in the U.S. and other international markets.
PDD's ADRs were up 1.96% on Wednesday following its third-quarter earnings.
The feeling of divergence between the two Chinese e-commerce giants was reinforced by a post by Alibaba founder Jack Ma on Wednesday in an internal staff forum, praising PDD's decision-making and execution but saying he was confident that Alibaba would change, in a comment seen by Barron's and translated using online tools.
Exactly what Ma's post means for Alibaba isn't clear. Ma is no longer involved in day-to-day running of Alibaba, having stepped down as chairman in 2019 and subsequently spent a period of months unreachable after Beijing regulators quashed plans for his fintech Ant Group to go public.
Alibaba stockholders will hope that it comes as a sign of determination to turn things round. Ma's post mentioned the promise of e-commerce powered by artificial intelligence, where Alibaba is aiming to stake out a leading position in the Chinese market.
However, it's not clear how well Alibaba can pursue its AI ambitions if it is prevented from buying the most advanced chips by U.S. restrictions. At the moment Alibaba seems to be mired in a price war with PDD's brands domestically, while struggling to match its explosive international growth -- that's a distinctly old fashioned type of retail competition and one it needs to get on top of quickly.
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