Alibaba heads south on SoftBank share sale speculation

maybefalse/iStock Unreleased via Getty Images

Alibaba (NYSE:BABA) shares fell 6%, Monday, on speculation that SoftBank may be in line to sell at least some of its stake in the Chinese Internet and e-commerce giant.

Citi analyst Alicia Yap said in a research note that Alibaba's (BABA) plans to register 1 billion new American depository shares [ADS] in the U.S. may be a sign that SoftBank intends to sell some of the 5.39 billion Alibaba (BABA) ordinary shares it owns. Citi said that SoftBank's stake is the equivalent of almost 674 million ADSs, or nearly 24% of Alibaba (BABA).

Last Friday, Alibaba (BABA) filed with the U.S. Securities and Exchange Commission to register 1 billion new ADSs, with each of those representing eight ordinary shares of Alibaba (BABA) stock. Yap said what makes the ADS registration unique is that its doesn't indicate the issuing of new stock, and holders of ordinary stock that hasn't been registered with the SEC will be able to sell their shares in ADS instead of as ordinary shares on the Hong Kong Stock Exchange.

"Since SoftBank has been a pre-IPO investor, we believe a large proportion of those shares have not been previously registered as ADS," Yap said.

Last week, Mizuho Securities analyst James Lee left his buy rating on Alibaba's (BABA) stock unchanged, but dropped his price target to $180 a share from $215, saying that there are signs the company had a "challenging quarter" at the end of 2021.

Comments

[alanlek01]

Ask Charlie Munger to buy more!

[qwerty11]

Charlie was wrong all along...

[801]

Baba stock needed to fill a gap below, which it now did and this was the excuse to do so. Very likely baba moves significantly higher from here

[v4255]

If there is a sale, it will be a block transaction done very quickly and without much impact on price. I think just as likely is the scenario that somebody wants to buy cheap and start speculation to depress the price.

[pat45]

BABA is 30 points from an all time low...

[Retire2020]

Softbank vs Charlie Munger. Who to wager?

[pat45]

@Retire2020 I think softbank has bigger pockets...but already in. Bad sign they are thinking of selling down here.

[Robert 7809591]

@Retire2020 As to who has the larger ego?? LOL

[TomasF]

@Retire2020 i belive softbank made worst invesrment decisions than charlie…

[language police]

The lower it goes the more it's hated. Hmm.

[Moomoo22u2]

The People’s Great Prosperity Corporate Unification Tax just around the corner.

[nate00078]

The real concern here is Russia invading Ukraine and China invading Taiwan. Everyone know Russia troops are in place and China has been testing Taiwans defenses for years… SoftBank selling is speculation but very concerning if they do choose to sell at these prices as my only guess is they see global conflict and want to get out.

[Vanamo]

Haha. It doesn't matter. The entire world seems happy to let Russia and Ukraine fight it out. A few pointless sanctions.

[nate00078]

@Vanamo Russian troops in civilian clothing will start fighting the Ukraine military. Russian troops will roll in to say they are protecting a supporting the peoples rebellion…. Hoping no one does anything because they are just protecting their ppl. Rinse and repeat…

[pat45]

@nate00078 Russia did the same "invasion" tactics the last couple years

[Jon Brien]

Let's all give a good cry for Charlie Munger

[WNB]

lol stupid softbank.

[Clark158f1]

BABA has support near $ 110 but I'm not touching it as its attempted to break it to many times.

If $ 110 breaks I don't want to be holding it.

[User 51108785]

No good.

[Ahirani]

Previous quarter there was a scramble. No body could figure out. MSNBC website said today before market open. Who knows!

[autumn leaf]

Baba's decline is reaffirmed? Softbank is unloading, will Warren Buffet acquire shares in Softbank's place? Jesus, believe me, this company is dying. Jack Ma involved into China's politics way too deep for hime to handle. He can keep his life and his business floating, but he won't have any privilege.

[ransim7222]

@autumn leaf And the BABA cash pile will be too much for Xi and his cronies to resist I bet.

[Puppychow]

@ransim7222 CCP already started confiscating people's $$$. Domestic banks are being forbidden from trading physical banknotes and coins while deposits have mysteriously been zeroed out (as in zero balance). The smart folks have pulled their money out of the Chinese banking system and buying foreign real estate left and right.

[ransim7222]

@Puppychow I have read many articles on Asian sites that suggest the Chinese debt problem is far bigger than anyone lets on and the recent financial shocks, stock crashes and economic weakness have put the CCP under severe strain. That may be why they are promoting real estate taxes where they have never had them before and seizing cash in firms they dislike. They may be suffering a cash crunch to keep up appearances. We just need to keep up the pressure and they may fold as the USSR did after Regan and the Star Wars ploy.

[Djreef1966]

Sounds like an opportunity.

Softbank - the OG ARKK Fund.

[EricCartmansMom]

Alibaba is cheap at todays stage, however the sentiment was bad, is bad and is going to be bad. CCP + softbank unloading shares.. I cannot see sufficient buyers atm, so we can go down way more...

[Duc1198]

Should be tomorrow Feb 8th.

[CatchTheFallingKnife]

Everyone has pain threshold, even Softbank is still sitting on 60 baggers, it's better to unwinding the position now than wait until the summer when the Fed starts to tightening liquidity. More pain ahead for BABA.

[aviane]

@CatchTheFallingKnife I don't think BABA could ever care less about the FED

[CatchTheFallingKnife]

@aviane

Softbank is bailing before the Fed hammer is coming down.

[aviane]

@CatchTheFallingKnife Again, why should BABA ever care about the FED fluffy hammer?

[ransim7222]

Don't worry, Munger will pick all of those shares up at a discount, right Charlie? He has BABA's back.

[Ahirani]

@ransim7222
More like backside