Alibaba Group Holding, the Chinese e-commerce giant, significantly increased its stock repurchases in the fourth quarter to $2.9 billion, up from $1.7 billion in the previous quarter. This move comes as Alibaba's share price experienced a decline.
In total, Alibaba bought back $9.5 billion of its stock during 2023. After accounting for shares issued under employee plans, this resulted in a net reduction of 3.3% of the company's outstanding shares.
As a result, Alibaba's American Depositary shares witnessed a 2.7% decline, settling at $75.43 on Tuesday. This decrease is attributed to the pressure on the Chinese Internet sector, with the Kraneshares CSI China Internet ETF down 3.7% at $26.01.
Despite these challenges, Alibaba investors are eager to see the company take a more aggressive approach to share repurchases. It is worth noting that Alibaba had approximately $62 billion in net cash at the end of September, accounting for around a third of its current market value of approximately $190 billion.
Another area that investors would like to see addressed is the enhancement of the company's dividend from the current 1% payout.
Alibaba's stock currently trades at an inexpensive valuation, with projected earnings for its fiscal year ending in March implying a price-to-earnings ratio of about nine.
Alibaba's consistent efforts have positioned it as one of the top stock choices for 2024. Its low valuation and significant cash position in China make it an attractive investment.
During the fourth quarter, Alibaba repurchased its stock at an average price of $79 per share, higher than the current share price. Over the same period, the stock declined from $86.74 to $77.51. Throughout 2023, Alibaba acquired its shares at an average price of $85 per share.
In 2023, the company managed to repurchase the equivalent of 112 million of its U.S. shares, leading to a reduction in share count to 2.5 billion. It is essential to note that Alibaba stock is also available for trading in Hong Kong.
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