(Bloomberg) — Alibaba Group Holding Ltd. gained its most in six months after billionaire co-founder Jack Ma bought stock, a much-needed boost for a company weathering internal turmoil and a stock market rout.
Most Read from Bloomberg
China’s e-commerce pioneer gained as much as 6.7% in Hong Kong, after climbing 8% in New York. Ma, the once-outspoken billionaire who retreated from public view after Beijing clamped down in 2020, bought about $50 million of stock last quarter, a person familiar with the situation said. Chairman Joseph Tsai — Ma’s longtime confidante — also separately bought about $150 million of shares in his first such purchase since 2017.
The revelation emerged as doubts persist about China’s post-Covid turnaround, helping trigger a market rout that’s hammered swathes of the world’s No. 2 economy. Alibaba itself lost more than 40% of its value over the past year, as the company that once defined Chinese e-commerce lost market share to PDD Holdings Inc. and underwent a management reshuffle. Tuesday’s US rally coincided with a 5% gain in a key gauge of US-listed Chinese stocks, after Bloomberg reported Beijing was readying a $278 billion market rescue package.
Alibaba’s woes, as well as the surprise exit of former Chief Executive Officer Daniel Zhang, spurred speculation that Ma himself may get more directly involved with his company. The co-founder has in recent months stepped up public activity, though it remains a far cry from the days when he was a regular on the global conference circuit.
“This could be iconic given Jack Ma’s image and it could boost market confidence in the short term. And it should be the first purchase by Jack Ma since eight years ago,” said Willer Chen, an analyst at Forsyth Barr Asia Ltd.
Read More: Alibaba Ousts Commerce Chief, Splits Assets in New Shakeup
“But for Alibaba, the major question is still how the company will compete with PDD and regain its growth,” he added.
Arguably China’s most famous entrepreneur, Ma in November broke years of silence to issue a call to arms for employees. He took to an internal message board to urge Alibaba to “correct its course” and praised PDD, which has been swiping market share with hit shopping app Temu. Ma said Alibaba could again be successful with determination and hard work.
It’s unclear whether Ma’s move, first reported by the New York Times, marks a reversal of a years-long stance. The billionaire has gradually sold down his stake in the company while focusing on his own projects including philanthropy. He disclosed plans to unload 10 million shares worth about $870 million on Nov. 21, according to filings last year.
But Ma’s buyback comes at a critical juncture for a company that once topped China and ranked among the world’s largest by market value.
Tsai and new CEO Eddie Wu are striving to rejuvenate Alibaba after a series of mis-steps and regulatory scrutiny eroded its dominance. The Chinese corporate icon, which has endured post-Covid consumption volatility and a bruising years-long government crackdown, now has to contend with the ascent of rivals including PDD and ByteDance Ltd.
Last year, the company unveiled a plan to split itself into six parts — then walked that back while ejecting Zhang. It scrapped a spinoff of its $11 billion cloud division that some investors wanted, declaring that the company needed a “reset.”
Read More: Jack Ma’s Biggest E-Commerce Rival Is Coming for Amazon, Walmart
Tsai’s Blue Pool Management purchased almost 2 million of Alibaba’s US-traded shares in the fourth quarter, worth about $152 million, according to the filing. It was the first time Tsai’s fund has purchased Alibaba stock since at least the last quarter of 2017, according to a review of regulatory filings.
Ma, who gave up his role as executive chairman in 2019 but is still a major shareholder, bought $50 million worth of stock in the quarter, the Times reported, citing a person with knowledge of the matter.
“This will trigger short-covering but long-term investors may not come in,” said Steven Leung, UOB Kay Hian executive director. “Long-term liquidity will return only when there is improvement in earnings outlook & the decrease in policy risk.”
–With assistance from Jeanny Yu, Peter Elstrom, Antonia Mufarech, Brian Chappatta and Vlad Savov.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.
