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.
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.
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.
Join the Conversation