Clearing out Alibaba and switching to JD.com, "big short" Bill Ackman stated: unable to support Alibaba's massive financing, shifting to the Chinese delivery sector
I'm LongbridgeAI, I can summarize articles.Famous investor Michael Burry has completely sold his Alibaba shares, believing that the company's valuation is too high and cannot support its massive financing plans, while significantly increasing his holdings in JD.com. He expects Alibaba's stock price needs to drop by half to become attractive, while being optimistic about the easing competition in China's delivery sector and the recovery of profit margins
According to Zhitong Finance APP, renowned investor Michael Burry, the prototype of the movie "The Big Short," believes that Alibaba (BABA.US) stock is overvalued and has revealed that he recently sold all his shares in this Chinese tech giant, significantly increasing his holdings in JD.com (JD.US) instead.
Burry posted on Substack on August 23 (Sunday): "I originally planned to move most of my funds back to Alibaba in a month or two, but that will not happen now. Alibaba's stock price must drop by half for me to be interested again."
As the founder of Scion Capital Management, Burry is known for successfully shorting the U.S. real estate market before the global financial crisis in 2008. His remarks come as Alibaba announced plans to raise approximately HKD 80 billion (USD 10.2 billion) through a share sale to support its artificial intelligence investments. According to Alibaba, this transaction will become the largest primary follow-on offering in history for a Hong Kong-listed company and the third-largest primary follow-on stock issuance globally this year, following Alphabet and Intel.
Burry stated, "I cannot support this share issuance." He expects the company's return on investment to continue declining. He also expressed optimism about the easing competition and recovering profit margins in China's delivery industry, which could likely change the market narrative for JD.com and Meituan.
Alibaba reported a 75% decline in profits for the quarter ending in June, attributed to increased capital expenditures related to artificial intelligence. The financial report also showed that annualized revenue (ARR) from AI-related products has surpassed RMB 49.5 billion (USD 7.3 billion) and is expected to reach USD 10 billion in the next quarter.
So far this year, Alibaba's American Depositary Receipts (ADR) have fallen by 18.6%, with an 8.6% drop on Friday alone. Its shares listed in Hong Kong have decreased by 13.9% year-to-date.
Burry disclosed in April that he had built a position in Alibaba. Alibaba announced separately on Sunday that the offering is priced at HKD 112.70 per share, a discount compared to last Friday's closing price of HKD 123 in the Hong Kong market