<\/p>\n
Alibaba Group Holding\u2019s efforts to revive sentiment after its $10 billion share placement has failed to dispel investor concerns over how it chose to finance its AI ambition.<\/p>\n
Co-founder Jack Ma and some of Alibaba\u2019s most senior executives have stepped in to buy shares, seeking to restore confidence after the deal triggered a major selloff. Yet the stock remains nearly 6% below its pre-deal close \u2014 a bigger drop than the 3%-3.5% earnings dilution analysts estimate from the share sale.<\/p>\n
Muted investor response to the buying spree \u2014 with shares rising about 3% over two sessions after a 8.5% drop \u2014 suggests unease over the Chinese tech giant\u2019s decision while doubts linger over the AI outlay payoff. Moreover, Alibaba carried out the placement over a weekend through a Regulation S deal, limiting the offering to non-US investors. That narrowed the pool of potential buyers and may make the shares harder to resell quickly.<\/p>\n
\u201cBuybacks are now a common feature across most China Internet companies, so they are unlikely to serve as a meaningful differentiator for Alibaba,\u201d said Gary Tan, a portfolio manager at Allspring Global Investments. \u201cOur sense is the market\u2019s reaction is driven more by the way Alibaba chose to raise capital than by the fundraising itself.\u201d<\/p>\n
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In January 2024, Alibaba shares surged after reports that Ma bought $50 million worth of shares in the previous quarter.<\/p>\n
Yet the experience of other Chinese tech companies suggests they\u2019re no guarantee of a rebound. Xiaomi Corp., for example, is about 25% lower since founder Lei Jun bought shares in the open market in November. Tencent Holdings Ltd. also struggled to win back investors in 2022 and 2023 despite its massive buyback program.<\/p>\n
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The fundraising underscores Alibaba\u2019s willingness to spend to stay ahead of the artificial intelligence race, with its planned outlays coming closest among China\u2019s biggest technology firms to those of US peers. The company said in an emailed response to Bloomberg that the placement was intended to \u201cextend the company\u2019s global AI leadership,\u201d with all of the net proceeds earmarked for its AI capabilities and infrastructure.<\/p>\n
For shareholders, the bigger question is whether all that AI spending will pay off. Investors globally are already asking that, with Nvidia Corp.\u2019s earnings this week a key test of the AI trade. Chinese tech firms like Alibaba may face an even higher bar.<\/p>\n
\u201cCompared to the capital-raising activities of their much larger and beloved US peers, China\u2019s tech platforms face noticeably tougher scrutiny from investors for the same,\u201d said Homin Lee, strategist at Lombard Odier. \u201cThis is hardly surprising as the low margin, high-volume approach embedded in most China AI strategies makes AI capex a trickier catalyst from ROI perspective.\u201d<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#Jack #Mas #buying #ease #Alibaba #share #sale #fallout<\/p>\n","protected":false},"excerpt":{"rendered":"
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