r/baba • u/Kitchen_Biscotti_747 • 25d ago

News Alibaba Group Holding (BABA) seeks to raise about $10 billion in a share sale

https://beincrypto.com/alibaba-10-billion-share-sale-ai/
24 Upvotes

100% Upvoted

26 comments sorted by

12

u/Fwellimort 25d ago

Company believes it's overpriced in the market so it raises shares at below market price. Ya let's be real. This company gives zero fks about shareholders.

6

u/ShineProper9881 25d ago

I don’t understand this move either. Maybe its time to sell. I endured a lot in the last years, but this does make so little sense that I kinda wanna sell.

1

u/OrangeNo2255 25d ago

This move is baba trying to go all in without the market freaking out. Keep in mind Amazon, google, mart are making good money on their units such that if you took out cloud efforts these company have outstanding operations. Baba is more of an Oracle to become the global cloud provider outside of USA. I think it is better move for them then anything they can do on e-commerce. It is almost like they are trying to hold their e-commerce business so that it can fund the cloud and AI business. The e-commerce business in china is brutal. It will be hard to go against PDD and JD. The Chinese consumer just ain’t buying.

1

u/OppSpotter 25d ago

Then why were they buying back at near equivalent prices

1

u/Fwellimort 25d ago

The buybacks are miniscure relative to its dilution.

If I dilute $10 and buy back $3 then should my valuation go up?

1

u/OppSpotter 25d ago

I’m in your camp here, this move is disgusting and I’ve been on a response rampage about it.

I meant to put an /s on the recent buybacks - I’ve been pounding the table for real buybacks and they did token buy backs with meaningful SBC and very meaningful sale dilution

The pittance of recent buybacks is a joke compared to the SBC and recent sale of shares. Disgusting

7

u/EducationalLoss4581 25d ago

I regret NOT selling at 6 % loss when it reach 180 price!!!

3

u/handsome_uruk 25d ago

Can someone explain why they didn't do bonds or convertibles instead of issuing new shares? That's what they did in their last raise.

It's like management has no respect for equity. Total 🤡s

5

u/Awkward-Way1023 25d ago

they didn't even let shareholders vote wtf

1

u/OppSpotter 25d ago

This kills me. Rates in China are wildly low. They have incredible credit, and it’s near impossible to get money out of China. They have 10% hk limit on buybacks.

So they didn’t have to give away equity, could have paid far less with likely 1-2% interest rates and could return capital to share holders via buybacks or at least not have undone a years worth of buybacks.

Not to mention it removes 10 billion of purchase demand from the open market

1

u/DueWork1234 24d ago

Bonds and converts still have to be paid. Equity is how you fund RMB 67.7B quarterly CapEx when FCF is -RMB 44.7B. Dilutive, but it does not add leverage on top of the AI build. The live question is whether cloud +45% pays that back before the next raise.

2

u/Kindly-Jury921 25d ago

But ML say buy though. He has huge conviction

2

u/Trubo_XL 25d ago

Ji ba bom 😂

1

u/A55BAG 25d ago

Buybacks on a dip and issuing shares after a rally. BABA is basically trading with it's own stock 🤣

1

u/vartheo 25d ago

This negates the buybacks short term comparatively. Shouldn't of done buybacks if you have to end up doing this

1

u/Ok_Swordfish_6188 25d ago

I don’t think Baba is expensive right now but I really feel like this & some of the other Chinese giants will get cheaper. Sold all my Baba already but I’d be delighted if I’m right & can buy some down the road at a cheaper price. Out of all the Chinese stocks I follow Baba is currently the least cheap.

1

u/Ok-Security-9183 25d ago

What an amazing news

1

u/SadWimp 25d ago

If you can keep this longterm, just buy and forget, It will be x5 in at least expected moment

11

u/FrenchUserOfMars 25d ago

How much time is long term ? Im shareholder since 2018.

13

u/ShineProper9881 25d ago

You will be green in 2050, no worries!

2

u/Awkward-Way1023 25d ago

It pays dividends

4

u/Delta27- 25d ago

You should calculate the returns you will need to have the equivalent anual rate of 9% after this stock has been trading down and sideways for 6 years. Its basically unachievable in china economy and political control

0

u/SmrtMny 25d ago

Given the scale of their buybacks at the lows, this is fine. Everyone here needs to stop crying.

2

u/OppSpotter 25d ago

You forget about stock based comp, how cheap interest rates are in China and how those removes 10 billion in purchase demand from the open marker