The purchase comes as BABA stock faces pressure from rising AI investments weighing on profits even as the equity placement fans dilution concerns.

  • Alibaba Chairman Joseph Tsai purchased $10.3 million worth of company shares on Monday, and CEO Eddie Wu acquired $5 million worth of stock.
  • Alibaba raised over $10 billion in an equity offering for institutions in Hong Kong, and Bloomberg reports the offer was oversubscribed three times.
  • Retail sentiment for BABA was ‘extremely bullish.’

Alibaba Group Holding executives, including co-founder and Chairman Joseph Tsai, bought 1.1 million shares worth about $15.3 million on Monday, according to filings with the U.S. Securities and Exchange Commission made on the same day.

The purchase came just as the Chinese e-commerce giant raised HK$80 billion ($10.2 billion) by selling shares in what was Hong Kong’s biggest follow-on offering.

Alibaba shares in Hong Kong dropped 8.5% on Monday, while the U.S. stock declined 0.7%. BABA stock dipped a further 2.4% in U.S. overnight trading late Monday. The previous week, shares were hammered after the tech and retail major reported a sharp drop in quarterly profits. 

BABA Insider Purchases 

Tsai acquired 720,000 ordinary shares at an average price of $14.29, putting the value of his purchase at about $10.3 million. CEO Eddie Wu bought 350,000 shares at a weighted average price of $14.24, worth about $5 million.

Wu’s shares were purchased in multiple transactions at prices ranging from HK$110.70 to HK$112.40, according to the filing. 

Following the purchases, Wu held 1.36 million shares directly, alongside holdings through his spouse and a trust. Tsai now owns 114 million shares through a corporation, with additional holdings listed through his spouse.

Tech Companies Sell Stock To Fund AI Expansion

Alibaba said on Monday it sold 710 million shares at HK$112.70 each. The deal — which was priced at a 3.6% discount to the Friday close of Alibaba’s U.S.-traded shares — attracted demand from institutional investors for almost three times the offering, Bloomberg reported, citing people familiar with the matter.

Alibaba will use the proceeds to invest in its full-stack AI capabilities, including expanding and enhancing its AI infrastructure. 

Tech companies are increasingly tapping equity markets to fund the massive cost of the AI buildout. Intel and Alphabet recently raised billions through stock offerings, seeking capital to expand AI infrastructure, manufacturing and computing capacity. 

The fundraising highlights how soaring AI spending is pushing even large technology companies to seek fresh capital rather than rely solely on internal cash flows.

Analysts, Retail Trades React To $10B Equity Raise

Alibaba’s move fanned both optimism and confusion among investors, especially since BABA stock is far from its peak. Shares are down about 38% from their all-time high last October.

Bank of America said the transaction was "a mix of growth financing, funding diversification, and pre-emptive balance-sheet strengthening." It reiterated a ‘Buy’ rating and $172 price target on Alibaba shares.

On Stocktwits, the retail sentiment for BABA flipped over Monday but remained in the ‘extremely bullish’ zone. 

“$BABA offering priced at 112.5 and oversubscribed meaning strong support and provides a solid bottom price base. Priced in on Friday. Could gap up Monday if another positive is announced. The market can be very unpredictable,” a trader said.

Year to date, BABA stock is down 18.5%.

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