Alibaba Group Chairman Joe Tsai and Chief Executive Eddie Wu bought HK$120 million of Hong Kong-listed shares, a show of confidence after the company's HK$80 billion placement. The purchases came as Alibaba's shares fell as much as 10 percent in early Monday trade on dilution concerns.
Alibaba Group Chairman Joe Tsai and Chief Executive Eddie Wu bought HK$120 million of Hong Kong shares after the company's HK$80 billion placement.
"Insider buying at this level shows management sees value in the stock, but the placement dilutes existing shareholders' interest in the short term," said Charles Wang, chairman of Shenzhen Dragon Pacific Capital Management.
Tsai bought 720,000 shares at an average price of about HK$112, spending roughly HK$80 million, while Wu bought 350,000 shares at about HK$111.6, spending HK$40 million, according to Hong Kong Stock Exchange filings. The combined 1.07 million shares total about HK$120 million.
The purchases follow Alibaba's announcement Sunday of a HK$80 billion placement of 710 million new shares at HK$112.70 each, an 8.4 percent discount to Friday's close. The stock fell as much as 10 percent to HK$110.10 in early Monday trade as investors weighed dilution against the company's AI spending plans.
The placement is the largest-ever primary follow-on offering by a Hong Kong-listed company and the third-largest globally this year after offerings by Alphabet and Intel. It was oversubscribed, with strong demand from sovereign wealth funds and other international investors, according to a person familiar with the matter. Morgan Stanley, HSBC, UBS and CICC arranged the deal.
Alibaba said it will use 100 percent of the net proceeds to invest in full-stack AI capabilities, including expanding AI infrastructure. The company has pledged to invest 380 billion yuan ($56.5 billion) over three years in cloud and AI infrastructure, and said in its latest quarterly report that it had already spent nearly half of that plan. Capital expenditure reached 67.68 billion yuan in the quarter ended June 30, up 75 percent from a year earlier, while net profit fell 75 percent because of AI-related spending.
Alibaba Cloud, the company's digital technology and AI division, launched its third data center in South Korea last week, bringing its network to 104 availability zones across 30 regions. The company said the projected payback period on its AI investment has shortened to two and a half years from three because of surging demand.
The insider purchases counterbalance the dilution concern and show management's conviction in Alibaba's AI strategy, which competes with Nvidia-backed models and domestic rivals such as Huawei. The placement is expected to close Aug. 26, and investors will watch whether the stock stabilizes above the placement price of HK$112.70.
This article is for informational purposes only and does not constitute investment advice.
