Alibaba Group’s Hong Kong-listed shares tumbled 9.67% to HK$111.10 on Monday, marking the lowest level since July 30, after investor Michael Burry disclosed a shift of capital from the e-commerce giant to rival JD.com.
The decline coincided with a broader retreat in the Hang Seng Index, which fell 2.15%, as Burry’s decision amplified concerns over Alibaba’s HK$80 billion secondary offering—the largest of its kind for a Hong Kong-listed company. The offering, priced at HK$112.70 per share, represents an 8.4% discount to Friday’s closing price and increases Alibaba’s total share count by approximately 3.7%.
Burry, known for his prescient bets against the U.S. housing market ahead of the 2008 financial crisis, cited Alibaba’s latest capital raise as a key factor in his decision. In a Substack post, he stated that he could not support the dilution associated with the issuance and warned that the company’s return on invested capital would likely continue to decline amid heavy investments in artificial intelligence. Burry added that Alibaba’s stock would need to fall roughly 50% before he would reconsider a position.
The proceeds from the secondary offering are earmarked for expanding AI capabilities and infrastructure, a strategy Burry argued would further strain returns. JD.com, which also declined 2.08% to HK$112.80, represents Burry’s preferred exposure in China’s e-commerce and delivery sector, where he expects competitive pressures to ease over time.
Alibaba’s net income fell approximately 75% year-over-year in the quarter ending June, while revenue grew 9% during the same period. The secondary offering is scheduled to close on August 26.
