As of August 25th, Alibaba’s founder Jack Ma has been increasing his holdings of Alibaba’s Hong Kong-listed shares by more than 600 million Hong Kong dollars. This move comes after a lackluster market response to Alibaba’s issuance of 80 billion Hong Kong dollars in new shares, prompting top executives at Alibaba to increase their holdings. However, prominent bearish investor in the U.S. stock market, Michael Burry, has expressed skepticism towards Alibaba’s current share price, and he does not view Alibaba’s latest new share issuance favorably.
According to sources familiar with the matter, on August 25th, it was revealed to The Paper (澎湃新聞) that Jack Ma has increased his holdings by over 600 million Hong Kong dollars. Information disclosed by the Hong Kong Stock Exchange shows that Alibaba Group’s chairman, Tsai Chung Hsin, and CEO, Daniel Zhang, have each increased their Alibaba shares by approximately 200 million Hong Kong dollars for two consecutive days. Collectively, Jack Ma and Alibaba’s management team have accumulated more than 800 million Hong Kong dollars in increased holdings recently.
Public announcements indicate that on August 23rd, Alibaba announced an 80 billion Hong Kong dollar new share issuance, with the proceeds earmarked for investment in AI capabilities and AI infrastructure construction throughout the entire stack. Following the news, on August 24th, Alibaba’s Hong Kong-listed shares plunged by more than 10% intraday, closing at 111.90 Hong Kong dollars per share, down by 9.02%, falling below the offering price of 112.70 Hong Kong dollars.
Despite the firm stance taken by Alibaba’s top executives in increasing their holdings, opinions in the market regarding Alibaba’s large-scale financing this time around remain divided.
Renowned bearish investor Michael Burry has stated his lack of confidence in Alibaba’s latest new share issuance and believes that the current share price is already too high, anticipating a continued decrease in the company’s return on invested capital (ROIC). Burry has already liquidated his holdings in Alibaba.
Burry expressed on the content platform Substack: “I originally planned to reallocate most of my position back to Alibaba in a month or two. But I’ve changed my mind. I won’t be interested unless Alibaba’s stock price drops by half.”
However, some institutions argue that despite the short-term pains seen in the capital markets, the market has exaggerated the dilution effect and has overlooked Alibaba’s strengthening in terms of the balance sheet and strategic initiative.