More good news are coming for Alibaba.
Wall Street Journal released an exclusive report on Ryan Cohen building a stake in Alibaba since August 2022.
This makes Cohen the next big American investor in Alibaba after Charlie Munger (via Daily Journal Corp.)
Who is Ryan Cohen?
He is one of the co-founders of Chewy, the online retailer for pet stuff. He made his first pot of gold after selling Chewy to Petsmart.
Thereafter he became more active in investing and was the largest individual investor in Apple.
He was also known as a GameStop investor and the king of meme stocks. He has since garnered a huge following.
Hence, this reported stake may provide a reason for his followers to buy Alibaba stock.
But unlike GameStop, Alibaba is a much larger company and thus we believe meme stock investors are unlikely to move the needle.
On a more serious note, Cohen is pushing the Alibaba management to upsize its share buyback program.
The current buyback is about $40 billion but Cohen believes that it can go to $60 billion, a 50% increase.
Given that Alibaba's market cap is only $310 billion, a $60 billion repurchase is equivalent to almost 20% of the market cap.
This should give a considerable boost to the share price.
Why? Assuming Alibaba shares are worth $240 each and the share price of $120 means it is undervalued.
During a share buyback, the management is using the company's cash to buy shares at undervalued prices from other shareholders.
Once the shares are bought, the outstanding shares are reduced and the per share value goes up. Shareholders also get a bigger pie of the earnings in the future.
All in all, Alibaba has the following events helping its stock price:
- Massive share buybacks
- Shareholder activism / backing
- Reopening of China's economy
- End of tech regulation
- Delisting threat lowered
- Potential Ant Group IPO
Hence, we believe that Alibaba share price should have more legs to run.
Video: Why Alibaba shares can go higher
https://youtu.be/JilVI4kW1oo
Comments
The continuous persecution of the Tech giants have left them unable to compete internationally.
To be seen if the tech giants can pick up from where they left off.
Tks u rulers for allowing the west to take advantage of the situation n ride the persecution waves...