Alibaba Upsizes Share Buyback by Two-Thirds to Record $25 Billion

Alibaba Upsizes Share Buyback by Two-Thirds to Record $25 Billion
The logo of Alibaba Group at its office in Beijing on Jan. 5, 2021. (Thomas Peter/Reuters)

Alibaba raised its share buyback program to $25 billion on Tuesday, the largest ever repurchase plan by the e-commerce giant, to prop up its battered shares as it fights off regulatory scrutiny and concerns about slowing growth.

Alibaba shares, which have more than halved in the past year, surged on the news and closed up 11 percent. Its U.S. listed stock rose 9 percent in premarket trading.

This is the second time Alibaba Group Holding Ltd has expanded its buyback program in a year. It had hiked the program from $10 billion to $15 billion last August.

“The upsized share buyback underscores our confidence in Alibaba’s long-term, sustainable growth potential and value creation,” Deputy Chief Financial Officer Toby Xu said.

Alibaba said it had $75 billion in cash, cash equivalent, and short term investments as of end-December.

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

Authorities subsequently halted the planned blockbuster IPO of its financial arm Ant Group and slapped Alibaba with a record $2.8 billion fine for anti-competitive behavior, triggering a long slide in its shares.

Growing competition from rivals, slowing consumption, and a maturing e-commerce market have also hit its performance.

In its last earnings release, Alibaba posted a 10 percent year-on-year revenue growth, its slowest quarter since going public in 2014 and the first time growth fell below 20 percent.

The company is currently preparing to layoff tens of thousands of staffers, Reuters reported in March.

Alibaba said it had re-purchased about $9.2 billion of its U.S.-listed shares as of March 18 under its previously announced program, which was slated to last until the end of this year.

The current $25 billion program will be effective for a two-year period through March 2024.

Alibaba named Weijian Shan, the executive chairman of investment group PAG, as an independent director to its board, and said Borje Ekholm, the CEO of Ericsson, will retire from Alibaba’s board on March 31.