June 30, 2022

Alibaba to buy back up to $25 billion in stock

Alibaba to buy back up to $25 billion in stock

Alibaba Holding Group Ltd.

Baba -4.35%

It boosted its share buyback program to $25 billion from $15 billion, in a bid to reassure investors about the company’s prospects after a year in which Its stock is down by more than half.

The potential buybacks are significant compared to the Chinese e-commerce giant’s market capitalization: As of Monday, the company’s market capitalization was around $270 billion, according to FactSet.

The revised buy-back program will be valid for two years until March 2024,

Ali Baba

Baba -4.35%

He said Tuesday morning Hong Kong time. She said the 67% increase in firepower earmarked for buybacks was “a sign of confidence in the company’s continued growth going forward.”

Chinese tech stocks in Hong Kong, China and the US – where they are listed as American Depository Receipts –It was very volatile Recently amid concerns that US regulators may move to delist Chinese companies as soon as 2024, and signs that Beijing’s long-running regulatory campaign will continue.

ADRs listed on Alibaba’s New York Stock Exchange are down about 13% this year — and down about 57% over the past 12 months — according to FactSet. Its shares are also traded in Hong Kong, where shares jumped 11% on Tuesday.

Alibaba said it had repurchased $9.2 billion in ADRs as of March 18 under its previous program. This amount will count toward the new total of $25 billion.

Citigroup analysts said the extended buyback plan was “probably the largest share buyback program ever in the Chinese Internet sector,” and suggested that Alibaba’s management viewed its shares as undervalued and attractive.

Separately, the company said Weijian Shan, CEO of PAG Investment Group, will join the board of directors as an independent director starting March 31.

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Alibaba said CEO Puri Ekholm, who has served on the board since 2015, will step down on the same day.

Many companies use buybacks to return cash to shareholders. Plans can help support stock prices by indicating confidence in a company’s outlook and financial health, while boosting earnings per share. In the last years, They also caused controversywhere critics say it would be better to reinvest the money into the business, in areas such as equipment, research and higher wages.

Companies in the S&P 500 have pumped more than $5.3 trillion into their stock buybacks since 2010. The Wall Street Journal explains how share buybacks work, and why there is debate about whether they’re good for the economy.

S&P 500 companies Identified $238 billion for buyback plans In the first two months of 2022, according to Goldman Sachs, the bank predicted that the full-year total could rise 12% to $1 trillion.

Some of the largest US tech companies have adopted larger buyback programs from Alibaba. Last year, for example, the parent company of Google

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And the

Microsoft corp.

Dedicated reach $50 billion and $60 billion respectively, to buy back.

write to PR Venkat at [email protected] and Quentin Webb at [email protected]

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It appeared on March 22, 2022, print edition as “Alibaba Increases Share Buybacks to $25 Billion”.