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Alibaba increases share buyback programme to $25bn in boost to stock

Alibaba has increased its share buyback plan to $25 billion as the Chinese e-commerce group seeks to boost investor confidence after slowing growth and a crackdown on the tech sector sent the company’s shares to multi-year lows Has.

The e-commerce group founded by Jack Ma has lost about 65 percent of its value since Chinese authorities canceled the IPO of its fintech arm Ant Group in November 2020, sparking months of regulatory scrutiny of the country’s biggest tech groups.

Alibaba said Tuesday it would increase its authorized share buybacks from $15 billion to $25 billion over the next two years. The company has already repurchased $9.2 billion worth of stock under the program.

Hong Kong-listed shares of Alibaba were up more than 12 percent by late afternoon. Shares of the company are up more than 40 percent since last week when Liu He, China’s top economics official, attempted rare intervention to make sure Investors and said Beijing will soon complete its “rectification” of the country’s major tech platforms.

China’s State Council, the country’s de facto cabinet, on Monday reiterated Beijing’s pledge to boost growth and protect financial markets from political devastation.

Growing geopolitical risks related to Russia’s invasion of Ukraine, US moves to begin delisting process for Chinese equities in New York and a Worsening of the Covid outbreak on the mainland have also created market volatility in recent weeks.

Daniel Zhang, Chief Executive, has repeatedly said that Alibaba’s shares are undervalued and the company would continue to buy back shares.

Public filings also suggest that Ma and Joe Tsai, Alibaba’s executive vice chairman, have slowed their stock sales amid the decline. Tsai didn’t sell any shares in the second half of 2021, and Ma only sold about 10 million shares during the year, about half the amount he sold in previous years.

According to research group Bernstein, Alibaba trades at a forward price-earnings multiple of 12.2, with cash on its balance sheet accounting for more than a quarter of its market value.

The relatively cheap share price has attracted well-known value investors like Berkshire Hathaway Vice Chairman Charlie Munger, but the company has yet to assuage the skepticism of many Wall Street analysts.

Robin Zhu, an analyst at Bernstein, pointed to Alibaba’s slow growth and declining margins as a concern. “Share buybacks should boost shareholder returns, but the longer-term problem is competitive headwinds in China’s e-commerce,” Zhu said.

Alibaba reported his slowest quarterly revenue growth in the fourth quarter since the 2014 IPO, with revenue up 10 percent year over year — the first time growth had fallen below 20 percent.

The company’s main e-commerce business faces growing competition from legacy e-commerce groups like Pinduoduo and JD.com, as well as newer platforms like ByteDance’s Douyin, TikTok’s sister app in China, with influencers Sell ​​products via streaming content.

Alibaba was imposed a record fine $2.8 billion for abusing its market position last year and Ant remains under scrutiny from regulators.

Alibaba also announced that Shan Weijian, chairman of Hong Kong-based investment group PAG, will replace Borje Ekholm, chief executive of Swedish telecom group Ericsson, as an independent board member effective March 31.

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Alibaba increases share buyback programme to $25bn in boost to stock Source link Alibaba increases share buyback programme to $25bn in boost to stock

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