Alibaba Group’s shares tumbled 9.67% to HK$111.10 on Monday, the lowest level since July 30, after Michael Burry disclosed he had exited his entire stake in the e-commerce giant and redirected the proceeds into rival JD.com.
The decline followed Alibaba’s announcement of a HK$80 billion ($10.2 billion) follow-on offering priced at HK$112.70 per share, an 8.4% discount to Friday’s close. The new shares, representing a 3.7% increase in Alibaba’s share count, are expected to close on Tuesday, according to a regulatory filing.
Burry, the investor known for his 2008 bet against the U.S. housing market, outlined his decision in a Substack post, stating that Alibaba’s shares would need to fall by about half before he would consider re-entering. He cited concerns over the company’s heavy spending on AI infrastructure, which contributed to a 75% year-over-year drop in net profit during the June quarter despite a 9% rise in revenue. The proceeds from the offering will fund further AI expansion, management said.
JD.com’s shares, meanwhile, fell 2.08% to HK$112.80, reflecting broader weakness in the Hang Seng Index, which declined 2.15% on the day. Burry described his new position in JD.com as large, citing expectations that China’s e-commerce and delivery market could shift toward a more rational competitive environment, potentially benefiting companies like JD.com and Meituan.
Alibaba’s June-quarter results highlighted the strain from AI investments, with capital expenditure on computing capacity and infrastructure surging. While revenue growth remained positive, the company’s return on invested capital is expected to face continued pressure, according to Burry’s assessment.
The follow-on offering marks the largest primary issuance by a Hong Kong-listed company, underscoring the scale of Alibaba’s funding needs amid a challenging regulatory and competitive landscape in China’s tech sector.
