Alibaba Raises Its Share Buyback Program To A New High Of $25 Billion

Alibaba increased its share buyback plan to $25 billion on Tuesday, the e-commerce behemoth’s biggest buyback plan, to shore up its damaged stock as it battles regulatory oversight and fears about economic weakness.

The plan comes when Chinese Vice Premier Liu He announced that Beijing will bring out further measures to strengthen the economy, as well as favorable regulatory steps for financial markets, in the last few days, sparking a tech sector boom.

The possible buybacks are significant when compared to the market capitalization of the Chinese e-commerce behemoth: According to data, it had a market capitalization of around $270 billion as of Monday.

Alibaba Group Holding Ltd has increased its stock buyback program for the second time in a year. Last August, it increased the program’s budget from $10 billion to $15 billion.

The program, which will operate for two years until March 2024, has been authorized by the management of China’s e-commerce giant, the business said in a statement. Shan Weijian, head of alternative asset management firm PAG, was also named as a new independent director. Shan, a long-time Chinese investor, will take over as CEO of Ericsson on March 31, succeeding Börje Ekholm.

Alibaba’s increased buyback reflects one of China’s largest shareholder-reward initiatives, and it corresponds with a re-calibration of opinion following Xi Jinping and his deputy Liu He’s visit to the United States. He promised to help the economy and markets, as well as end the crackdown on the tech industry as quickly as feasible, causing Chinese equities to soar to new highs.

The company’s stock (9988.HK) has dropped more than 50% in the last year.

On Tuesday, Alibaba’s stock rose as much as 5.4 percent in Hong Kong. On Monday, its stock fell 4.3 percent in the United States. China’s biggest corporations are only now beginning to emerge from a year of unprecedented regulatory scrutiny in industries ranging from online shopping to social media.

Authorities then stopped Alibaba’s planned IPO of its banking unit Ant Group and fined the company a record $2.8 billion for anti-competitive behavior, causing its stock to plummet.

Its performance has also been harmed by increasing rivalry from rivals, slowed consumption, and a developing e-commerce market.

Alibaba’s most recent earnings report showed sales growth of 10% year over year, its poorest quarter since coming public in 2014 and the first time growth dropped under 20%.

Alibaba said that as of March 18, it had repurchased $9.2 billion of its U.S.-listed shares as part of its program, which was originally set to last until the end of the year.

Until recently, Chinese IT companies rarely used large shareholder-return schemes like dividends or stock repurchases. However, nearly two years after a harsh internet crackdown that quickly enveloped everything from e-commerce to ride-hailing and online education, the country’s major firms have committed themselves to a new age of cautious expansion.

Alibaba posted the worst quarterly growth on record in the fourth quarter, and Tencent Holdings Ltd. is poised to follow suit on Wednesday. Pinduoduo Inc., an e-commerce competitor, missed revenue projections for the third quarter in a row.

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