Alibaba Group Holding Ltd (阿里巴巴) has spent more on share buybacks than any other tech firm since the sector’s downturn began, but that has done little to boost its stock’s fortunes.
The e-commerce giant’s shares are trading about 60 percent below last year’s peak even after the company deployed more than US$9 billion to repurchase its stock, according to Bloomberg’s calculation.
The Hangzhou, China-based firm yesterday unveiled a plan to boost its buyback plan to US$25 billion — the third increase since Beijing’s tech crackdown started in late 2020.
Photo: Paul Yeung, Bloomberg
The stock’s lackluster performance reflects lingering worries about the impact of China’s crackdown, which has left virtually no corner of Alibaba’s core business untouched.
It also mirrors the broader weakness in Chinese equities, where a fresh COVID-19 outbreak and slowing economic growth have hurt sentiment.
To be sure, Alibaba’s shares jumped as much as 9.8 percent to HK$108.80 in Hong Kong yesterday after the buyback was announced, but, that is still a distance from the peak of HK$267 reached in February last year.
The stock’s losses of US$450 billion are the world’s biggest after those of its peer Tencent Holdings Ltd (騰訊), according to data compiled by Bloomberg.
Alibaba’s board approved the buyback program, which is to run for two years through to March 2024, the company said in a statement.
The company’s upsized buyback represents one of the largest shareholder-reward programs in China’s giant Internet industry.
The buyback “signals where company management sees value, and it may also be a bellwether for where they see regulatory action — perhaps we are coming closer to the end of it,” said Justin Tang (鄧文雄), head of Asian Research at United First Partners in Singapore.
Chinese tech corporations have until recently rarely resorted to big shareholder-return programs like dividends or stock repurchases.
However, the country’s largest corporations have resigned themselves to a new era of cautious expansion, nearly two years into a bruising Internet crackdown that quickly engulfed everything from e-commerce to ride-hailing and online education.
Alibaba reported its slowest growth on record during the December last year quarter, and Tencent was expected to do the same today.
E-commerce rival Pinduoduo Inc (拼多多) reported revenue that missed estimates for the third straight quarter.
Alibaba acquired 56.2 million American depositary shares under its previously announced share buyback program for about US$9.2 billion, it said in the statement yesterday.
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