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Alibaba's lead founder Jack Ma Young may be praying for good fortune as Monday's stock market crash means the stock price of the e-commerce giant has shed 35 percent this year. Photo: Sam Tsang

China’s Alibaba tells employees not to lose faith as Black Monday drags shares below IPO price, costs Jack Ma US$545 million

Alibaba
Even staffers at China’s e-commerce king Alibaba seem to have been spooked by Monday’s stock market crash, which pulled the seemingly unassailable company’s New York-listed shares below their initial public offering price for the first time and prompted its chief executive to issue a damage-control email reassuring employees of a rebound.

After global markets were rattle by one of the worst trading days in many years on “Black Monday”, Alibaba's Daniel Zhang urged his work force to “ignore the [company's] stock price” and “focus on customers” in an internal email sent on Tuesday.

Alibaba's shares shed nearly 5 per cent and got as low as US$58.14 on Monday before ending the day at US$65.86. The company listed last September for a record US$25 billion, when its shares traded at US$68. They got as high as US$119.50 in November.

Many of its employees are shareholders in the company, which controls around 80 per cent of online shopping revenue in China and owns the hugely lucrative Taobao and Tmall e-commerce platforms.

The total holdings of Alibaba's staffers were estimated at US$41 billion when it went public, media reports claimed.

But Monday's volatility exacerbated its sliding stock price and also saw the personal fortune of Ma, China's second-richest man, decline by around US$545 million, AFP reported. Wang Jianlin, chairman and founder of property and entertainment company Dalian Wanda, lost US$3.6 billion, it added.

Zhang said in his email that “this is not the first global market crash, and it of course will not be the last”. Since January, Alibaba’s shares have wound down by over a third.

He urged employees to keep putting “customers first” and not to lose faith in the company, which he suggested would weather the storm with its deep cash reserves – believed to be worth hundreds of billions of dollars - strong cash flow and scalable profitability.

Industry pundits were also upbeat about the company’s prospects amid China’s ongoing e-commerce boom.

Watch: US stocks sinks nearly 600 points on worries about China

Robert Peck, an internet analyst at American bank holding company SunTrust, said Alibaba would continue to perform well. In an interview with CNBC he highlighted its “strong fundamental top-line growth, improving margins, cash flow generation [and] strong balance sheet”.

Alibaba is not the only Chinese technology company hit by this week’s global market slump. At least two more of the country's internet giants took a beating. 

Hong Kong-listed Tencent’s share price fell to $15.59, down15 per cent from a week earlier, while US-listed Baidu shed 15.7 per cent over the same period. Baidu is China's top search engine and Tencent runs a number of platforms including the WeChat and QQ mobile messaging tools.

But Alibaba is the first one that has issued any known response to the market crash. Its share price edged back slightly to US$68.56 on Tuesday.

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