Alibaba stock soared Tuesday as the China e-commerce giant raised its stock buyback program by two-thirds, as it fights off regulatory scrutiny.
Alibaba raised the size of its share buyback program to $25 billion, from $15 billion, "in a sign of confidence about the company's continued growth in the future," the company said in a written statement.
It's Alibaba's third buyback announcement since government officials initiated a regulatory crackdown on Chinese internet stocks in late 2020.
Alibaba stock jumped 11%, closing at 114.99 on the stock market today. Among other China stocks, Baidu rose 5.4% to 154.59. JD.com climbed 5.4% to 64.73. Pinduoduo soared 18.9% to 47.53.
Confidence In Company's Potential
"The upsized share buyback underscores our confidence in Alibaba's long-term, sustainable growth potential and value creation," Deputy Chief Financial Officer Toby Xu said in written remarks.
The repurchase program will be effective for a two-year period through March 2024, the company said.
Chinese stocks have been pounded since the regulatory crackdown began, hurt by regulations, Covid-19 disruptions and macroeconomic concerns. Also applying pressure were threats of China companies being delisted by U.S. exchanges.
The moves have shaken investor confidence and wiped out billions of dollars in market value in this group of Chinese stocks.
Alibaba Stock Under Pressure Since 2021
Since hitting a record high in October 2020, Alibaba stock has lost 64% of its value through Tuesday's close. JD.com is down 40.2% from a high in February 2021 through Tuesday, while Baidu fell 56.4% during that time. Pinduoduo plunged a whopping 77.6% from its February 2021 peak.
Last Wednesday, China stocks surged by double digits, as comments from government officials indicated that the crackdown would ease. Officials also said they would support overseas stock listings and build stability in capital markets.
However, the optimism didn't last long as China stocks have moved up and down since then, with little signs of stability. The group was hit hard again on Monday.
Alibaba said it had $75 billion in cash, cash equivalent and short term investments as of the end of December.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
