Alibaba increases share buyback size to $25 billion

A man walks past an Alibaba Group logo at his office building in Beijing, China August 9, 2021. REUTERS/Tingshu Wang

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March 22 (Reuters) – Alibaba on Tuesday raised its share buyback program to $25 billion, the largest buyback plan ever by the e-commerce giant, to bolster its battered shares as it battles the coronavirus pandemic. regulatory scrutiny and concerns about slowing growth.

The plan comes amid a rally in tech stocks in recent days after Chinese Vice Premier Liu He said Beijing would roll out more measures to stimulate the economy as well as policy measures supportive of capital markets. Read more

This is the second time that Alibaba Group Holding Ltd has expanded its buyback program in a year. He had increased the program from $10 billion to $15 billion last August.

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Shares of the company (9988.HK) have cratered more than 50% in the past year.

“The bullish share buyback underscores our confidence in Alibaba’s long-term, sustainable growth potential and value creation,” Deputy Chief Financial Officer Toby Xu said.

“Alibaba’s share price does not accurately reflect the value of the company given our strong financial health and expansion plans.”

Alibaba shares rose 4.8% in Hong Kong after the news. In the United States, its shares closed down 4.3% on Monday.

Alibaba’s takeover decision makes sense given that Beijing’s measures against monopolistic behavior and “disorderly expansion of capital” will limit its opportunities for new investments, said Rukim Kuang, founder of Beijing-based Lens Company Research. .

“Internet giants will start to refocus on their core business in the future. As a result, there is no need for companies like Alibaba to keep such large sums on their books,” he said. added.

Alibaba said it had $75 billion in cash, cash equivalents and short-term investments as of the end of December.

The company has been under pressure since late 2020 when its billionaire founder, Jack Ma, publicly criticized China’s regulatory system.

Authorities later halted its financial arm Ant Group’s successful IPO plan and fined Alibaba a record $2.8 billion for anti-competitive behavior, triggering a long slide in its shares.

Growing competition from rivals, slowing consumption and maturing e-commerce market also hurt its performance.

In its latest earnings release, Alibaba posted 10% year-over-year revenue growth, its slowest quarter since its 2014 IPO and the first time growth has fallen below by 20%. Read more

The company is currently preparing to lay off tens of thousands of employees, Reuters reported in March. Read more

Alibaba said it had repurchased about $9.2 billion of its U.S.-listed shares as of March 18 under its previously announced program, which was to last until the end of this year.

The current $25 billion program will run for a two-year period until March 2024.

Alibaba has appointed Weijian Shan, executive chairman of investment group PAG, as an independent director on its board, and said Borje Ekholm, CEO of Ericsson (ERICb.ST), will step down from the board. administration of Alibaba on March 31.

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Reporting by Shubham Kalia in Bengaluru and Josh Horwitz and Jason Xue in Shanghai; Editing by Sherry Jacob-Phillips and Himani Sarkar

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