Alibaba has over $70 billion in cash and short-term investments. The company's shares have been on a downward trend for the past two years, due to slower revenue growth and a decrease in gross profit margin. In the same period, Alibaba has only repurchased 133 million shares, or 4.84% of its total outstanding shares. This is a relatively small amount, given the company's large cash reserves.
Alibaba is not short on cash for additional IPOs. The company has a strong balance sheet and is generating significant cash flow. However, an aggressive buyback strategy would be a more effective way to build trust with investors. By repurchasing shares, Alibaba would be signaling to investors that it believes in its own long-term prospects. This would help to boost the company's stock price and restore confidence in its management team.
An aggressive buyback strategy would also help to reduce Alibaba's share count. This would increase the earnings per share of the remaining shares, which would be beneficial to shareholders. Additionally, a smaller share count would make Alibaba's stock more attractive to institutional investors, which could further boost its price.
In conclusion, Alibaba should consider an aggressive buyback strategy to build trust with investors and boost its stock price. The company has the financial resources to do so, and it would be a wise use of its cash reserves.
Comments