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Alibaba Raises Share Buyback Size to a Record $25bn

Alibaba’s shares rose 4.5% in Hong Kong after the news, while in the United States, its shares closed down 4.3% on Monday


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Alibaba Group's shares slumped in December 2020 after the then buyback amount of $10 billion failed to ease concerns about a regulatory crackdown on co-founder Jack Ma's e-commerce and financial empire. Reuters file photo.

Alibaba raised its share buyback plan to $25 billion on Tuesday, the largest ever repurchase plan by the e-commerce giant, to prop up its battered shares as it fights off regulatory scrutiny and concerns about slowing growth.

The plan comes amid a tech stock rally in the past few days after Chinese Vice Premier Liu He said that Beijing will roll out more measures to boost the economy as well as favourable policy steps for capital markets.

This is the second time Alibaba Group Holding has expanded its buyback programme in a year. It had hiked the programme from $10 to $15 billion last August.

Shares of the company have cratered more than 50% in the past year.

“The upsized share buyback underscores our confidence in Alibaba’s long-term, sustainable growth potential and value creation,” deputy chief financial officer Toby Xu said.

“Alibaba’s stock price does not fairly reflect the company’s value given our robust financial health and expansion plans.”

Alibaba’s shares rose 4.5% in Hong Kong after the news. In the United States, its shares closed down 4.3% on Monday.

Alibaba has been under pressure since late 2020 when Ma publicly criticised China’s regulatory system.

Authorities subsequently halted the planned IPO of its financial arm Ant Group and slapped Alibaba with a record $2.8 billion fine for anti-competitive behaviour, triggering a long slide in its shares.

Growing competition from rivals, slowing consumption, and a maturing e-commerce market have also hit its performance.

In its last earnings release, Alibaba posted a 10% year-on-year revenue growth, its slowest quarter since going public in 2014 and the first time growth fell below 20%.

The company is currently preparing to layoff tens of thousands of staffers, it was revealed last week.

Alibaba said it had already re-purchased about $9.2 billion of its US-listed shares as of March 18 under its programme, which was initially slated to last until the end of this year.

The current $25 billion programme will be effective for a two-year period through March 2024.

Alibaba also named Weijian Shan, the executive chairman of investment group PAG, as an independent director to its board, and said Borje Ekholm, the CEO of Ericsson, will retire from Alibaba’s board on March 31.

 

  • Reuters with additional editing by Sean OMeara

 

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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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