Alibaba Says It Considers Selling Convertible Bonds to Raise $5 Billion, Then Its Hong Kong Shares Suddenly Dropped

By Trisha Andrada

May 24, 2024 06:18 AM EDT

Hong Kong-listed shares of Alibaba dropped more than 5% on Thursday after news broke that the Chinese e-commerce giant was considering issuing convertible notes to get $5 billion.

After plummeting more than 6% earlier in response to the report, shares closed the trading day 5.24% down. Based on the statistics provided by LSEG, CNBC reported that the company ranked as the third worst performer for the Hang Seng index that day.

This photo taken on October 30, 2020 shows the logo of the Alibaba Group outside the offices of the Ant Group, the financial arm of the Chinese e-commerce giant, in Hong Kong.
(Photo : ANTHONY WALLACE/AFP via Getty Images)

Convertible Bond Sale of Alibaba

Alibaba confirmed on Thursday its plan to offer convertible bonds valued at $4.5 billion. Before this, Bloomberg had already reported, citing unnamed sources, that a bond sale might surface this week.

According to Alibaba, the sale proceeds will be used to buy back some of its American depositary shares.

Read Also: Alibaba Executive Will Step Down to Promote Younger Managers Amid Restructuring Efforts

Alibaba Dealing With Domestic Slowdown

Alibaba has been dealing with a local slowdown caused by cautious spending among Chinese customers. State media group Xinhua reported that the nation's economy recovered slowly from stringent COVID-19 restrictions, with online retail sales up only 11.5% year over year.

Thus, the additional funding is expected to ramp up Alibaba's activity in its core e-commerce industry. The company's net profit dropped 86% in the fiscal fourth quarter.

Alibaba had a rocky 2023 when it carried out its biggest-ever corporate structure makeover and implemented some high-profile management changes. Despite these, the company expressed optimism that it will capture further market share in AI and cloud services. 

Read More: Alibaba Co-Founder Jack Ma, the Chinese Tech's Poster Boy, Moves Into Food Business

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