|

Alibaba to Buy Back Stock Shares after Reviving Ailing Share Prices due to Economic Slowdown

Alibaba to Buy Back Stock Shares after Reviving an Ailing Share Prices due to Economic SlowdownAlibaba Group Holdings is planning to buy back around $4 billion of stock after it tried to revive a share price that was battered by concerns on the slowing down of the Chinese economy after going public in less than a year. Alibaba will buy the shares over a two-year period to offset dilutions from its compensation programs. The plan to buy back came as Alibaba posted its first quarter sales, which rose at its slowest pace in three years and posted transaction volume with missed estimates, prompting shares to fall 6 percent in pre-market trading.

Alibaba drop in market value of around $100 billion, a big decline than Goldman Sachs Group in November, which was driven by a Chinese economy expanding at a weakest rate since 1990, and lawsuits, which concerns sales of counterfeit goods. Company’s revenue in three months that ended June rose 28 percent or 20.2 billion yuan down from 56 percent in the previous 12 quarters. Also Gross merchandise volume that measures transactions in Chinese retail places increased by 34 percent or 673 billion yuan just short of the 38 percent growth that was expected by analysts.

Alibaba is fighting price cuts and competition in bigger cities in China, as a shift in shopping on smartphones is generating less advertising revenues and the slowest economic growth since 1990. But this did not deter Jack Ma from expanding as he announced a $4.6 billion investment in Suning Commerce Group in order to get more access to electronics retailers network under intense competition from other online shopping sites.

Online shopping in big cities already reached its saturation point and Alibaba is giving heavy discounts in its group buying sites just to get a large market share. Alibaba is diversifying businesses while simultaneously tapping more residents that access the Internet using their smartphones and tablets. The company’s strategy will include expanding into healthcare, entertainment and location based services using its own YunOS smartphone operating system.



Leave a Reply

*

The Contributor

Follow me on twitter: TriaSasin

    Connect with Jasmin:
  1. - Email: Click here

Have Your Say!

Where is your favorite holiday destination in SEA?

View Results

Loading ... Loading ...

  1. Sophia yu: Totally agreed that money doesn’t buy happiness
  2. Joe Hung: I think your composition is good.It is inspirational.I think you are hard working when you do this...
  3. Sugar: Thanks!
  4. Jack Zhou: Good article
  5. aggie liu: good luck