Alibaba is Getting Strong

Alibaba is Getting Strong

2022-11-22 • Updated

Alibaba has raised its buyback to $25 billion as crackdowns ease and due to that, its shares jumped more than 11%, the highest in about a month.

Why is it interesting?

Until recently, Chinese technology corporations have rarely resorted to large shareholder return programs such as dividends or share buybacks. However, the country's largest corporations have resigned themselves to a new era of cautious expansion, after nearly two years of brutal internet repression that quickly swept everything from e-commerce to taxi bookings and online education.

Alibaba has increased its buyout arsenal for the third time since the tech crackdown began in Beijing in late 2020 — twice in less than a year. It purchased $56.2 million of the US depository shares in a previously announced share buyback program for approximately $9.2 billion. It means it has spent more on buyback than any other tech firm has since the sector's downturn began. However, this did little to increase the fortunes of the shares.

Additionally, the company is facing increasing competition from other e-commerce groups like Pinduoduo and JD.com and emerging platforms including ByteDance's Douyin, as well as a TikTok subsidiary in China that allows influencers to sell products via streaming content. In addition, Alibaba was fined a record $2.8 billion last year for abusing its market power.

What’s happening lately with Alibaba?

Shares of Alibaba Group Holding Ltd. rose 13% on Tuesday in New York after the company boosted its share-buyback program to $25 billion, raising hopes that Beijing is easing an online crackdown that has wiped out $470 billion of the e-commerce giant's value. The board of directors has approved the program, which will run for two years until March 2024, the company said in a statement.

Alibaba's increased buyback represents one of the largest programs to reward shareholders in China's giant internet industry. It also coincides with a reassessment of sentiment after Xi Jinping and his deputy, Liu He, vowed to support the economy and markets and stop the crackdown on the tech sector "as soon as possible", which triggered a historic rise in Chinese stocks.

What to wait for?

Growing geopolitical risks associated with Russia's invasion into Ukraine, the US moves to start the process of delisting Chinese stocks in New York, and the intensifying Covid outbreak on the mainland have also fueled market volatility in recent weeks. However, Chinese e-commerce group hopes to boost the investors’ confidence after a slowdown in growth and a crackdown in the tech sector, sending the company's stock to a multi-year low of $73.28.

Now, the current relatively low share price has attracted high-profile value investors such as Berkshire Hathaway vice chair Charlie Munger. Still, the company has yet to overcome the skepticism of many Wall Street analysts. On March 22, Alibaba shares closed at their near-month high in Hong Kong, while the US depositary receipts traded at $113.66 at 9:47 am in New York. Technically, the price should get above $120 to reverse the downtrend.

To sum up, despite various obstacles, it seems that Alibaba can cope with them. According to the latest earnings report, Alibaba's operating cash flow remains very attractive and robust, exceeding $30 billion a year.

Similar

TESLA Earnings Report Outcome Forecast
TESLA Earnings Report Outcome Forecast

In a call scheduled for January 25, 00:30 am GMT+2, the Tesla Inc. team will publish the company's earnings for the final quarter of 2022 and comment on the results, projections, and outlook for the nearest future of the company.

Will NETFLIX surprise investors?
Will NETFLIX surprise investors?

The Netflix stock (NFLX), with a market cap of $145.17B and a whooping 10 000+% rise since its inception 16 years ago, experienced some turbulence for a short period last year while trading around the $250 share price. However, the NFLX stock quickly recovered and rose to over $300 towards the end of the previous quarter of 2022.

Q4 2022 Earnings Report
Q4 2022 Earnings Report

The Q4 earnings season has been interesting, mainly because of the turbulent global economic outlook. On this premise, analysts forecast a disappointing performance for several stocks ahead of the Q4 earnings report publishing.

Latest news

Will USDJPY slide lower in 2023?
Will USDJPY slide lower in 2023?

Last year was tough for the Japanese yen. USDJPY gained more than 30% over 2022, striking above 150 in October. While anticipation of slower Fed rate hikes pulled the pair below the 130 level at the start of 2023, the speculations over the destiny of BOJ’s yield control policy grabbed the attention of the Japanese assets in the middle of January. What lies ahead for traders of the Japanese yen?

BoC Rates Could Alter The Trend on USDCAD and others
BoC Rates Could Alter The Trend on USDCAD and others

Today, at 5:00 pm (GMT +2), the Bank of Canada will publish the Overnight Rate, which represents short-term interest rates, and is pivotal to the overall pricing of the Canadian Dollar in the global markets. Let's look at how the markets are faring ahead of the BoC rates release.

MSFT faces gloomy forecasts ahead of earnings report
MSFT faces gloomy forecasts ahead of earnings report

In a call scheduled for January 25, 00:30 am GMT+2, Microsoft will publish the company's earnings for the final quarter of 2022 and comment on the results, projections, and outlook for the nearest future of the company.

Deposit with your local payment systems

Feel the Team Spirit

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

Beginner Forex book

Beginner Forex book will guide you through the world of trading.

Beginner Forex book

The most important things to start trading
Enter your e-mail, and we will send you a free Beginner Forex book

Thank you!

We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera