Alibaba shares soared 7% on Thursday after the Chinese internet trading company announced it was replacing its chief executive as part of a purge of older managers.
The company, which has lost more than $20bn (£13bn) of market value since its $231bn flotation on the New York stock exchange in September, said current CEO Jonathan Lu would be replaced by chief operating officer Daniel Zhang on Sunday.
Investors welcomed the management shake-up, and a better-than-expected 45% increase in quarterly sales, sending Alibaba shares up nearly 8% to $86 by 11am.
Despite the share price surge – the biggest intraday increase since September – the shares are still far below the $119.15 they hit in a post flotation high in November.
Jack Ma, Alibaba’s billionaire founder, said: “Daniel is a proven international business leader and innovator with a strong track record of delivering results.
“He has the confidence of our entire management team, and there is no better person to lead Alibaba Group as we embark on the next stage of our growth on top of the strong foundation that Jonathan helped build.”
Zhang, who joined Alibaba in 2007, became chief operating officer in September 2013 and was the key architect behind Singles Day – the 11 November event that has overtaken Black Friday in the US to become the world’s largest online shopping event.
Ma said the CEO change, which was part of a wider management shake-up, was part of a wider handover of control to a younger generation. “This marks a future where the post-70 generation will command the troops at Alibaba Group!,” he said in a letter to employees.
However, the age gap between Zhang and Lu is hardly massive. Zhang was born in 1972, while Lu born in 1969, according to Chinese media.
The announcement came as the company reported a 45% jump in sales in the first three months of 2014 to 17.4bn yuan ($2.81bn) – beating analysts’ estimates of $2.77bn.
Zhang will be tasked with trying to extend Alibaba’s reach into new markets. It has started sales in Russia, Brazil and India through its AliExpress service, but international sales accounted for just 9% of its revenue. Ma has set a target of getting 50% of sales from outside China.
Analysts fear Alibaba may also be facing e-commerce user saturation. The increase of active buyers, or customers who buy at least one product a year, was the slowest in three-and-a-half years – up just 5% from the previous quarter to 350m.
Mobile sales eclipsed desktop sales for the first time to account for 51% of total revenue, up from 42% in the previous quarter.
Ma, an English teacher-turned businessman who twice failed his university entrance exams, founded Alibaba in a cramped one-bedroom flat in China 15 years ago.
“We have a dream,” Ma said as he rang the opening bell to officially launch the flotation on the NYSE last year. “We hope in the next 15 years the world changes because of us. We hope in 15 years people say this is a company like Microsoft, IBM, Walmart. They changed, shaped the world … We want to be bigger than Walmart.”
