Hedge fund manager Michael Burry disclosed on August 23 that he fully exited his Alibaba Group Holdings ADR stake and reallocated capital to JD.com Inc ADR, according to regulatory filings reviewed August 24. The move comes as Alibaba completed a HK$80 billion ($10.2 billion) primary follow-on offering, the largest ever for a Hong Kong-listed company, priced at HK$112.70 per share—an 8.4% discount to the prior close.
Alibaba’s ADR fell 9.67% to HK$111.10 on the placement news, while its U.S.-listed shares slipped to $119.34 in pre-market trading from $116.89. Burry stated he would require a roughly 50% decline in Alibaba’s price before reconsidering the position. The company’s June-quarter earnings showed net income dropping to $15.35 billion from $17.83 billion a year earlier, despite an 8% revenue increase to $148.4 billion. Return on invested capital fell to 2.6% and return on equity to 7.1%, down from prior periods.
JD.com’s valuation metrics contrast sharply with Alibaba’s. JD’s trailing P/E stands at 17.9x versus Alibaba’s 25.0x, with forward P/E at 8.3x compared to 17.4x. JD’s enterprise value to EBITDA is 6.6x, less than half Alibaba’s 12.4x. JD also trades at a lower price-to-book ratio of 1.2x against 1.7x for Alibaba, while offering a free-cash-flow yield of 10.7% compared to Alibaba’s negative 4.2%. Analyst consensus targets suggest 19.9% upside for Alibaba at $143.11 and 49.6% for JD at $43.94.
Morgan Stanley maintained an Underweight rating on JD.com with a $28 target, citing concerns over margin compression. Barclays projects JD.com’s non-GAAP net margins to decline to between 2.3% and 2.5% by 2030, down from prior levels, with return on equity expected to fall from 20.3% to 12.6%. JD’s revenue totaled $187 billion, while net income halved to $2.81 billion. The stock was last quoted at $29.37, down 0.14% in regular trading, with after-hours activity at $29.27.
