Alibaba to increase share buybacks by $25B

BEIJING: Chinese e-commerce giant Alibaba Group will increase its share buyback program by $25 billion, the company announced Wednesday, as it published disappointing quarterly results.

In the quarter ending March 31, Alibaba posted sales of 260.3 billion yuan ($36.7 billion), up 5 percent year on year, the firm said in a statement — but below analysts’ forecasts.

The leading tech company faces fierce competition from rivals such as JD.com, Pinduoduo and Douyin, China’s version of video app TikTok.

Alibaba’s quarterly net profit (October to December) came to 14.4 billion yuan, a drop of 77 percent year on year, the statement said.

“Our board of directors approved an increase of $25 billion to our share repurchase program, demonstrating our confidence in the outlook of our business and cash flow,” Chief Financial Officer Toby Xu said in the statement.

The buyback program will run until the end of March 2027, the group said.

The firm’s existing buyback program was already one of the largest in China, amounting to around $9.5 billion last year alone, according to Bloomberg.

Wednesday’s unexpected announcement caused a stir in the markets, briefly sending Alibaba’s US-listed shares up by more than 5 percent in trading before the open.

A pioneer in Chinese online shopping, the group is listed in New York and Hong Kong.

Based in eastern China’s Hangzhou, Alibaba is a key player in the country’s digital sector and is considered a barometer of consumer spending in the world’s second-largest economy.

Restructuring setback

China’s economy is still struggling to recover from the country’s strict zero-Covid health policy, abolished at the end of 2022.

Alibaba’s disappointing sales figures revealed on Wednesday add to the uncertainty surrounding the group, which had a turbulent 2023, with a major restructuring program facing setbacks.

In November, it announced the cancellation of a planned spin-off of its cloud computing business due to US restrictions on computer chips.

Citing national security concerns, the United States has said it wants to limit Chinese companies’ US National Security Advisor Jake Sullivan said last month that Washington’s curbs on advanced chips to China were about safeguarding security and not disrupting commerce after Chinese Premier Li Qiang had denounced “discriminatory” trade barriers as a threat to the global economy — a clear reference to US actions.