Источник изображения: CNBC

Alibaba shares try to resist plunge amid news of increased buybacks


The interest of Chinese regulators in the Alibaba Group business has already caused the Internet giant’s share price to decline last week, starting with a 7.98% drop in quotes. The Chinese company tried to counteract such dynamics by increasing its share buyback program from $ 6 to $ 10 billion, but this measure had a limited effect only on the American market.

Image source: CNBC

Image source: CNBC

It became known this month that Chinese regulators have decided to limit the influence of large Internet companies on the market, and the first under the distribution will be a third of Alibaba Group’s Ant Group, a major player in the financial technology sector. Representatives of the competent authorities have already had a conversation with the founder of Alibaba and Ant, Jack Ma, recommending in the case of the latter to focus on the activities with which Ant began to build its business. From unofficial sources it became known that Jack Ma is ready to nationalize any part of his business, but analysts believe that this will not come to this, and the holding that belongs to him is simply threatened with restructuring with all business processes in line with the requirements of Chinese legislation. Alibaba shares began to fall back on Thursday, but earlier this week they were supported by the news of an increase in the buyback amount from $ 6 to $ 8 billion under a two-year program. This move allowed the company’s shares to resist further decline.

At least, the rate of Alibaba Group’s depositary receipts on American stock exchanges not only did not decline, but even increased by tenths of a percent. In fact, this move can only slightly affect investor sentiment, since the buyback program is designed until the end of 2022, and the actions of regulators may negatively affect the well-being of Alibaba in the coming months. On the Hong Kong Stock Exchange, the company’s shares fell by almost 8%, more accurately reflecting the global trend.

Baird experts lowered their forecast for Alibaba shares from $ 325 to $ 285, while maintaining their rating of “better than market”. The outcome of the antitrust investigation by the Chinese authorities is now difficult to predict, and this scares investors the most. Baird believes that there will be no significant changes to Alibaba’s core business, but stronger antitrust controls will allow competitors to strengthen their market position.

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