Jul 05, 2024

Alibaba is back above crucial resistance as Chinese stocks see a rebound. 

BABA-–-Daily-Chart BABA – Daily Chart 

BABA has climbed above $75 again on the ADR and could now close the gap to $77.88 for the next resistance test. 

Alibaba’s stock was higher after the company announced that further stock buybacks were coming.

The company completed a share buyback of $5.8 billion in the first quarter ending June 30, which led to a net decline of 2.3% in its total outstanding shares. The company’s shares rallied around 3% on the day, and Alibaba’s Hong Kong-listed shares gained 3% during the trading session.

The buyback was conducted as part of Alibaba’s current program, which has $26.1 billion remaining and continues until Q1 2027. In FY24, Alibaba bought back $12.5 billion in shares, reducing its share count by 5%. 

Artisan Partners wrote in a Q1 letter that the company remains a popular stock with hedge fund investors.

“There isn’t much new to say about Alibaba. There was no meaningful news that drove the share price decline. The earnings for the December quarter were fine, with revenues and profits both increasing 5%—not typically an exciting level of growth, but certainly enough to justify the company’s paltry valuation of 4X–5X EBIT. As we have written in recent letters, this is a valuation level that is normally reserved for a dying business, and Alibaba is not a dying business. Management continues to implement changes that are intended to increase shareholder value,” they said. 

Other hedge fund investors, such as Billionaire David Tepper and Big Short investor Michael Burry, are optimistic about Alibaba and other Chinese retailers. 

A positive Caixin manufacturing survey also boosted Chinese stocks.

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