Alibaba’s shares listed in Hong Kong dropped more than 5%. Thursday in response to a rumour that the $5 billion-raising Chinese internet behemoth is thinking of offering convertible bonds for sale.
TakeAway Points:
- Alibaba’s Hong Kong-listed stock fell 5.24% after the close of trade, following a more than 6% decline earlier in the day.
- According to Bloomberg, the Chinese tech giant is thinking of issuing convertible bonds as a means of raising $5 billion.
Alibaba shares see Decline
According to the Bloomberg article, shares fell more than 6% earlier in the day and finished the trading session 5.24% lower. Alibaba’s NYSE-listed shares were down 2.03% at 05:44 a.m. ET in premarket trading in New York.
Based on LSEG statistics, the company’s performance on the day was the third poorest in the Hang Seng index. According to Bloomberg, which cited unnamed sources, a bond offering might happen this week.
Chinese e-commerce competitor JD.com followed suit earlier this week when it announced a $1.75 billion convertible senior note issuance with a 0.25% coupon that was due in five years.
Alibaba weathered a turbulent 2023 that resulted in a significant restructuring of the company’s corporate structure and an 86% decline in net earnings for the fourth quarter.
Alibaba’s Share Buyback programme
In an attempt to entice investors, the business declared in February that it would be increasing the scope of its share buyback programme by $25 billion.
Eddie Wu, the CEO of Alibaba, promised to “reignite” the company’s growth earlier this year with additional investments. There are indications that this tactic will start to pay off in the March quarter.
The company’s operations in its primary e-commerce business, where it has struggled with a local slowdown brought on by cautious Chinese consumer spending, would benefit from more funding. According to Chinese state news agency Xinhua, the latest official numbers indicate an 11.5% year-over-year increase in Chinese internet retail sales. The Chinese economy as a whole began a slow recovery from the harsh Covid-19 restrictions.
Expanding Market Shares with AI
Alibaba also intends to increase its market share in the rapidly expanding artificial intelligence and cloud service sectors. After the first iteration of the technology was introduced in April 2023, the business unveiled the most recent version of its Tongyi Qianwen large language model earlier this month. This software is capable of powering artificial intelligence applications.
It recently reduced prices on a variety of its LLMs by up to 97%, according to Reuters, joining an increasingly intense price battle in China.
With gains of 4.03% on the Hong Kong Stock Exchange and 6.67% on the New York Stock Exchange, Alibaba shares have been trending higher so far this year.
About Alibaba
Alibaba Group Holding Limited, also known as Alibaba, is a Chinese global technology business focused on e-commerce, retail, the Internet, and technology. Established on June 28, 1999, in Hangzhou, Zhejiang, the company offers local consumer, digital media and entertainment, logistics, and cloud computing services in addition to consumer-to-consumer (C2C), business-to-business (B2B), and business-to-consumer (B2C) sales services via Chinese and international marketplaces. It is the owner and operator of a varied portfolio of businesses across multiple industries across the globe.
