Chinese e-commerce giant Alibaba plans to buy back 25 billion dollars’ worth of its own shares. The current slump in share value is unjustified and not a fair reflection of the real value, the management says.
“Not a fair reflection”
Chinese technology companies like Alibaba were once the stars of the stock market landscape, but today they have lost much of their lustre. Investors lowered their enthusiasm after the Chinese government started imposing stricter rules on the sector last year, and more recently – after the pandemic – growth also slowed. The current geopolitical tensions are causing additional caution.
Alibaba’s shares have plummeted 56 % in the past year: unjustly so, according to the management. The current price does not fairly reflect the company’s value given its robust financial health and expansion plans, Deputy Chief Financial Officer Toby Xu says. More about these expansion plans will be revealed at the RetailDetail Congress on 28 April in Antwerp, as General Manager UK, Benelux & Nordics Roland Palmer will give an exclusive keynote.
To counter the downward trend, Alibaba will speed up its share buyback program significantly, from 15 billion dollars to 25 billion – the largest ever buyback program of a Chinese internet share. The buyback will last two years, until March 2024. The boost “underscores our confidence in Alibaba’s long-term, sustainable growth potential and value creation”, Xu said. The e-commerce giant also continues to grow despite the pandemic-induced headwinds, the CFO stressed.
As of 28 February, Alibaba had about 21.5 billion common shares issued and outstanding, so the buyback amounts to about 2 % of all listed shares. Xu emphasises that Alibaba has enough firepower – read: liquid assets – in reserve to cope with this financially. Since January, the company has so far bought 1.5 billion dollars’ worth of its own shares.
What are Alibaba’s plans in Europe? What can we expect from the Chinese dragon in the future? Roland Palmer General Manager UK, Benelux & Nordics, will give an exclusive keynote at the RetailDetail Congress on 28 April in Antwerp. Click here for info and tickets.