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
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.
(Photo : ANTHONY WALLACE/AFP via Getty Images)
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 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
© 2024 VCPOST, All rights reserved. Do not reproduce without permission.
Join the Conversation