Alibaba announced in its earnings report that it would increase its previous $10 billion buyback plan to $15 billion. This is the company's largest buyback ever and also the largest buyback in Chinese corporate history.
In the A-share market, buybacks exceeding 10 billion yuan are rare. Currently, the two companies with the strongest buyback efforts in the A-share market are Midea and Gree, with buyback amounts exceeding 10 billion yuan each.
Most A-share listed companies are still focused on financing and selling stocks. As soon as stock prices rise, they want to reduce their holdings; some shareholders are eager to sell all their shares to you.
In the US stock market, buybacks like Alibaba's are quite common. The top tech giants in the US stock market have been continuously repurchasing their own shares.
Microsoft conducted a $40 billion buyback a couple of years ago. Apple and Amazon are currently raising debt to finance share buybacks.
Financing share buybacks indicates that the company is confident about its long-term operations, and the cost of debt is lower than the returns gained from the stock market.
Alibaba's bold move to repurchase shares with substantial funds also reflects the company's optimism about future growth prospects. Additionally, after this recent decline, its valuation has indeed become quite cheap.
On August 3, Alibaba announced its first-quarter financial report for the fiscal year 2022 (the 2022 fiscal year refers to the period from Q2 2021 to Q1 2022).
Three key points in the report are worth noting:
1) The cloud computing business grew by 29% year-over-year to RMB 16.051 billion, with adjusted EBITA turning profitable at RMB 340 million, compared to a loss of RMB 1.121 billion in the same period last year. If it weren't for losing the TikTok international order, the growth of the cloud business would have been even stronger...