Alibaba increases share repurchase to $25 billion

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

MARCH 22 (Reuters) – Alibaba raised its share buyback program to $25 billion on Tuesday, in the e-commerce giant’s largest-ever buyback plan, to shore up its troubled shares as it battles regulatory oversight and concerns about slowing growth. .

The plan comes amid a rally in tech stocks in the past few days after Chinese Vice Premier Liu He said Beijing will roll out more measures to boost the economy as well as favorable policy steps for capital markets. Read more

This is the second time that Alibaba Group Holding Ltd has expanded its buy-back program in a year. It increased the program from $10 billion to $15 billion last August.

company shares (9988.HK) Dig over 50% in the last year.

“The amplified stock buyback underscores our confidence in Alibaba’s long-term sustainable growth potential and value creation,” said Toby Xu, deputy chief financial officer.

“Alibaba’s share price does not fairly reflect the value of the company in light of our aggressive financial and expansion plans.”

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

Rukim Kwang, founder of Beijing-based Lens Company Research, said Alibaba’s buyback decision made sense given that Beijing’s actions against monopolistic behavior and “uncontrolled expansion of capital” would limit its opportunities for new investment.

“Internet giants will begin to refocus on their core business in the future. As a result, it is not necessary for companies like Alibaba to keep such large amounts of cash on their books,” he added.

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

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

Authorities then halted a planned initial public offering of Ant Group, its financial arm, and imposed a record fine of $2.8 billion on Alibaba for its anti-competitive behavior, leading to a prolonged decline in its shares.

Increasing competition from competitors, slowing consumption, and the maturation of the e-commerce market have also affected its performance.

In its latest earnings release, Alibaba posted revenue growth of 10% year-on-year, the slowest quarter since it went public in 2014, growth for the first time fell below 20%. Read more

Reuters reported in March that the company was currently preparing to lay off tens of thousands of employees. Read more

Alibaba said it has repurchased about $9.2 billion of its US-listed shares as of March 18 under its previously announced program, which was set to run through the end of this year.

The current $25 billion program will be in effect for two years, through March 2024.

Alibaba has appointed Weijian Shan, CEO of PAG Investment Group, as an independent director of its board of directors, said Borg Ekholm, CEO of Ericsson. (ERICb.ST)He will retire from Alibaba’s board of directors on March 31.

Additional reporting by Shubham Kalia in Bengaluru, Josh Horowitz and Jason Ziw in Shanghai; Editing by Sherry Jacob Phillips and Himani Sarkar

Our criteria: Thomson Reuters Trust Principles.