$Alibaba(BABA)$ Read the Bloom

Read the Bloomberg article on the bond

A few quotes:

"AIibaba is taking advantage of cheap financing as well as a sharp rally in its shares"

"Convertible bonds allow companies to borrow at lower rates than regular market

borrowings"

It's cheap money by definition !

The risk is dilution. BUT here BABA embedded "capped call transactions" that are similar to a "bull call spread" to protect against dilution.

BABA and investors are saying we think the share price is going higher ! We see it as a bullish signal.

BABA is borrowing money at a cheap rate so we can build/compete in the AI Cloud arena.

IMHO, The buyback will be a catalyst.

The revenue from the cloud business will be a catalyst for years to come.

If you think the share price goes down then the bond is bad.

If you think it will go up from here, the bond is Great.

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Comments

fizzik
05-27
fizzik
The capped call transactions provide protection against dilution.
dong123
05-27
dong123
Bullish signal indeed!

Leave a comment

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BUT here BABA embedded \"capped call transactions\" that are similar to a \"bull call spread\" to protect against dilution.BABA and investors are saying we think the share price is going higher ! We see it as a bullish signal.BABA is borrowing money at a cheap rate so we can build/compete in the AI Cloud arena.IMHO, The buyback will be a catalyst.The revenue from the cloud business will be a catalyst for years to come.If you think the share price goes down then the bond is bad.If you think it will go up from here, the bond is Great.</body></html>","htmlText":"<html><head></head><body> <a data-mention-id=\"BABA\" class=\"teditor-mention\" data-mention-name=\"Alibaba\" href=\"https://ttm.financial/S/BABA\">$Alibaba(BABA)$</a> <v-v data-views=\"1\"></v-v> Read the Bloomberg article on the bondA few quotes:\"AIibaba is taking advantage of cheap financing as well as a sharp rally in its shares\"\"Convertible bonds allow companies to borrow at lower rates than regular marketborrowings\"It's cheap money by definition !The risk is dilution. BUT here BABA embedded \"capped call transactions\" that are similar to a \"bull call spread\" to protect against dilution.BABA and investors are saying we think the share price is going higher ! We see it as a bullish signal.BABA is borrowing money at a cheap rate so we can build/compete in the AI Cloud arena.IMHO, The buyback will be a catalyst.The revenue from the cloud business will be a catalyst for years to come.If you think the share price goes down then the bond is bad.If you think it will go up from here, the bond is Great.</body></html>","text":"$Alibaba(BABA)$ Read the Bloomberg article on the bond A few quotes: \"AIibaba is taking advantage of cheap financing as well as a sharp rally in its shares\" \"Convertible bonds allow companies to borrow at lower rates than regular market borrowings\" It's cheap money by definition ! The risk is dilution. BUT here BABA embedded \"capped call transactions\" that are similar to a \"bull call spread\" to protect against dilution. 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