Alibaba’s Hong Kong-listed shares dropped over 5% following a report that the company is considering selling $5 billion in convertible bonds. The shares closed 5.24% lower after falling more than 6% earlier in the day. In premarket trading on the NYSE, Alibaba’s shares were down 2.21% at 04:51 a.m. Bloomberg reported that the bond offering could happen as soon as this week, citing anonymous sources. Alibaba did not immediately respond to requests for comment and CNBC could not independently confirm the report.
JD.com, Alibaba’s Chinese e-commerce rival, recently took a similar step by offering $1.75 billion in convertible senior notes due in five years with a 0.25% coupon. Alibaba had faced challenges in 2023, including an overhaul of its corporate structure and an 86% decline in fourth-quarter net profit. To attract investors, the company announced in February that it was increasing the size of its share buyback program by $25 billion. As this breaking news story continues to develop, CNBC’s Arjun Kharpal has contributed to the report.
Alibaba’s decision to potentially raise $5 billion through convertible bonds has had a negative impact on its stock price, with the company’s shares dropping significantly. The uncertainty surrounding the timing and terms of the bond offering has likely contributed to the decline in investor confidence. The response from Alibaba and the lack of independent confirmation of the report from CNBC further add to the uncertainty surrounding the situation.
The move by JD.com to offer convertible senior notes worth $1.75 billion may have influenced Alibaba’s decision to pursue a similar strategy. Both companies are likely looking to raise additional capital to fund their growth initiatives and strengthen their balance sheets. Alibaba’s challenges in 2023, including a significant decline in net profit, have likely put pressure on the company to explore alternative sources of funding.
Alibaba’s decision to increase the size of its share buyback program by $25 billion earlier in the year was seen as a positive move to attract investors and boost shareholder confidence. However, the recent decline in the company’s stock price following the news of the potential convertible bond offering indicates that investors may have concerns about Alibaba’s financial health and long-term growth prospects. The company will need to provide more clarity and transparency regarding its financial strategy to address these concerns and regain investor trust.
As this breaking news story continues to develop, investors will be closely watching Alibaba’s next steps and how the company plans to use the proceeds from the potential convertible bond offering. The outcome of this decision could have significant implications for Alibaba’s future growth trajectory and its ability to compete with rivals in the Chinese tech industry. It remains to be seen how Alibaba will navigate these challenges and whether the company will be able to regain investor confidence in the coming months.
