Alibaba Group Holding Ltd (NYSE: BABA) is in focus on Tuesday after Ryan Cohen was reported to have built a stake in the multinational tech behemoth.
Why did he amass a stake in Alibaba?
The activist investor now has hundreds of millions of dollars worth of stake in the Chinese conglomerate – not very significant versus the company’s market cap of just over $300 billion.
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Nonetheless, Cohen, who amassed the said stake in the back half of 2022, is pushing the eCommerce giant to further stretch its share repurchase programme, as per a WSJ report this morning.
Targeting Alibaba is quite a change of pace for the billionaire who’s known to focus his activist ventures on smaller companies like Bed Bath & Beyond. Alibaba shares have gained nearly 85% since late October.
Cohen wants a $20 billion increase in buyback
Anonymous sources also told the Wall Street Journal that Cohen first contacted the board in August of 2022 and said the Hangzhou-headquartered firm could increase its free cash flow by up to 20% in the next five years.
Subsequently, Alibaba expanded its stock buyback programme by $15 billion in November to a total of $40 billion to be executed by March 2025.
Now, though, Cohen is pushing for another $20 billion increase in share repurchase to $60 billion. Alibaba is yet to officially respond to the WSJ report.
In its latest reported quarter, Alibaba came up with only a 3.0% annualised growth in sales. Alibaba shares are still trading at less than half their record price in the final quarter of 2020. They’ve taken a massive hit over the past two years due to Beijing’s regulatory crackdown on tech titans.
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