On Thursday, Hong Kong-listed shares of Alibaba experienced a significant drop of over 5% following reports suggesting that the Chinese tech giant is contemplating a $5 billion convertible bond sale.
The day concluded with Alibaba’s shares plummeting by 5.24%, marking a notable decline, despite earlier slipping over 6% following revelations from Bloomberg regarding the potential bond offering.
Pre-market trading in New York showed Alibaba’s NYSE-listed shares down by 2.03% at 05:44 a.m. ET, indicating investor concerns over the reported bond sale.
Alibaba’s performance made it the third worst performer of the Hang Seng index for the day, according to data from LSEG.
While Bloomberg, citing anonymous sources, hinted that the bond offering could materialize as early as this week.
This move echoes a similar step taken earlier in the week by Chinese e-commerce counterpart JD.com, which initiated a $1.75 billion convertible senior note offering, scheduled for a five-year tenure with a 0.25% coupon.
Alibaba’s potential bond sale arrives amidst a tumultuous 2023 marked by a corporate restructuring and an 86% decline in fourth-quarter net profit. In a bid to shore up investor confidence, the company had announced a $25 billion expansion of its share buyback program back in February.
With Alibaba CEO Eddie Wu’s commitment to reigniting growth through further investments, the company aims to leverage additional capital to bolster activities across its core e-commerce domain and expand its presence in the burgeoning fields of artificial intelligence and cloud services.
Despite grappling with a slowdown in domestic spending among Chinese consumers amid a tepid economic recovery from Covid-19 restrictions, Alibaba continues its pursuit of capturing additional market share in key sectors, exemplified by recent initiatives like the release of its Tongyi Qianwen large language model. As Alibaba navigates these strategic moves, its shares have seen mixed performance, with a 4.03% rise on the Hong Kong Stock Exchange and a 6.67% increase on the New York bourse since the beginning of the year.
