Jack Ma buys Alibaba shares to show support for the struggling empire

Jack Ma buys Alibaba shares to show support for the struggling empire

(Bloomberg) — Alibaba Group Holding Ltd. posted its most gains in six months after billionaire co-founder Jack Ma bought shares, representing a much-needed boost for a company reeling from internal turmoil and a stock market collapse.

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China’s leading e-commerce company gained as much as 6.7% in Hong Kong, after rising 8% in New York. Ma, a once-outspoken billionaire who retreated from public view after Beijing imposed strict measures in 2020, bought about $50 million worth of shares last quarter, a person familiar with the situation said. Chairman Joseph Tsai — a longtime confidant of Ma — also separately bought about $150 million worth of shares in his first purchase since 2017.

This revelation emerged as doubts persisted about China’s post-Covid transformation, which helped spark market turmoil that affected large swaths of the world’s second-largest economy. Alibaba itself has lost more than 40% of its value over the past year, as the company that once defined Chinese e-commerce loses market share to PDD Holdings Inc. It underwent an administrative change. The US rally on Tuesday coincided with a 5% rise in a key gauge of US-listed Chinese stocks, after Bloomberg reported that Beijing was preparing a $278 billion market rescue package.

Alibaba’s woes, as well as the sudden exit of former CEO Daniel Zhang, have raised speculation that Ma himself may be more directly involved in his company. The co-founder has in recent months ramped up his public activity, though it’s still a far cry from the days when he was a regular on the global conference circuit.

“This could be a highlight given Jack Ma’s image and could boost market confidence in the short term. This should be Jack Ma’s first purchase in eight years,” said Wheeler Chen, an analyst at Forsyth Barr Asia Ltd.

Read more: Alibaba fires commerce chief and divides assets in new changes

“But for Alibaba, the key question is still how the company will compete with PDD and regain its growth,” he added.

Arguably China’s most famous businessman, Ma broke years of silence in November 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 was grabbing market share with its successful shopping app Temu. Ma said Alibaba can achieve success again with determination and hard work.

It is unclear whether the move, first reported by The New York Times, represents a reversal of a position that has persisted for years. The billionaire gradually sold his stake in the company while focusing on his own projects, including charitable work. He revealed plans to unload 10 million shares worth about $870 million on November 21, according to filings last year.

But the buyback comes at a critical juncture for a company that once overtook China and was among the world’s largest companies by market value.

Tsai and new CEO Eddie Wu are scrambling to rejuvenate Alibaba after a series of missteps and regulatory scrutiny that eroded its dominance. The Chinese corporate icon, which has struggled with post-Covid consumer volatility and a years-long government crackdown, must now confront the rise of rivals including PDD and ByteDance Ltd.

Last year, the company unveiled a plan to split itself into six parts, then backed off while Zhang was fired. It canceled 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 competitor is coming to Amazon and Walmart

Tsai’s Blue Pool Management bought nearly 2 million U.S.-traded shares of Alibaba stock in the fourth quarter, worth about $152 million, according to the filing. It was the first time Tsai’s fund had bought Alibaba shares since at least the fourth quarter of 2017, according to a review of regulatory filings.

Ma, who stepped down as CEO in 2019 but remains a major shareholder, bought $50 million worth of shares in the quarter, the Times reported, citing a person familiar with the matter.

“This will lead to short covering but long-term investors may not come in,” said Stephen Leong, CEO of UOB Kay Hian. “Long-term liquidity will return only when there is an improvement in earnings expectations and lower policy risks.”

–With assistance from Jenny Yu, Peter Elstrom, Antonia Movarish, Brian Ciabatta, and Vlad Savov.

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