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NEW YORK (CNNMoney) -- Yahoo shares plunged another 6% Friday after the company struggled to explain its deteriorating relationship with Chinese Internet company Alibaba.
Yahoo owns about 40% of Alibaba Group, which itself owns Yahoo China as well as three massive Chinese properties including online payment service Alipay.
On Wednesday, Yahoo disclosed to the SEC that Alibaba transferred 100% of its ownership of Alipay -- to a new company controlled by Alibaba CEO Jack Ma.
Yahoo (YHOO, Fortune 500) shares fell 7% Wednesday after the news. Yahoo's Alibaba stake is one of the company's bright spots as it has lost market share in display advertising, once its biggest stronghold, to rivals Google and Facebook.
Yahoo scrambled to clean up the mess with a statement on Thursday, saying it was not made aware of the asset transfer until March 31 -- and that it "occurred without the knowledge or approval of the Alibaba Group board of directors or shareholders."
Alibaba disputed those claims in a statement to the Wall Street Journal, saying the transfer was discussed at several board meetings as long as two years ago.
Yahoo investors are clearly confused and worried. Shares fell as much as 7% midday Friday but recovered a bit to close 3.6% lower.
"The acute lack of clarity around the Alipay issue is calling into question the value ... of Yahoo's Chinese assets," said Jefferies analyst Youssef Squali in a research note Friday.
The proposed Alipay transfer "raises serious concerns about Yahoo's ability to retain this asset ... without potentially a long drawn out process that could include litigation," Squali continued.
Deutsche Bank analyst Jeetil Patel agreed that Yahoo may have a tough road ahead with Alibaba.
"The risk is increasing that monetization of China assets may prove a little elusive," Patel wrote in a research note. "Alibaba is making it clear that its management determines fate of the business (not Yahoo)."
It's not the first time Ma, the Alibaba CEO, and Yahoo head Carol Bartz have butted heads. In September, Alibaba offered to buy back Yahoo's stake for about $11 billion. Yahoo declined.
In addition to Alipay, Alibaba owns B2B platform Alibaba.com, and e-commerce site Taobao. Alibaba.com went public on Hong Kong's stock exchange in 2007 and raised $1.7 billion -- at the time the second-biggest Internet IPO ever, behind only Google (GOOG, Fortune 500). 
