Burry’s comments come after Alibaba announced its June-quarter profit plunged 76% and capital expenditure jumped 75% on AI infrastructure.
- Michael Burry said that he won’t rebuy Alibaba stock, saying it would have to drop 50% from here before he looks at it again.
- Alibaba is selling shares to raise $10.2 billion, and all of the net proceeds will be used to boost its “full stack” AI capabilities.
- It would be the biggest primary follow-on offering ever by a company listed in Hong Kong.
Michael Burry said on Sunday that he wouldn’t return to Alibaba Group Holding Ltd. (BABA) after the Chinese technology company disclosed a $10.2 billion share placement to fund its artificial intelligence ambitions.
On X, he said, “I will not flip any of that back to #Alibaba, as issuing shares is now its new paradigm,” adding that the stock would have to fall by half even for him to consider buying it. The investor who became famous for his bet against subprime mortgages said he turned his Alibaba stock into a large JD.com Inc. (JD) position a few months ago.
Alibaba Plans $80B Share Sale To Fund Full-Stack AI Push
Alibaba said it proposed to offer to non-U.S. persons outside the United States newly issued ordinary shares for a total consideration of HK$80 billion, subject to market and other conditions. All net proceeds would be used to invest in the company’s “full stack” AI capabilities, including chips, infrastructure and the development and deployment of AI models, it said.
Alibaba was offering 710 million shares at HK$112.70 each, a 3.6% discount to the closing price of its American depository receipts on Friday. The sale would be the largest primary follow-on offering ever by a Hong Kong-listed company.
BABA stock closed below 8% on Friday. On Stocktwits, retail sentiment around BABA remained in the ‘extremely bullish’ zone accompanied by ‘extremely high’ chatter levels over the past day.
Alibaba posted June quarter results that showed the cost of its AI build-out. While sales increased 9% to 269 billion yuan and net profit attributable to ordinary shareholders fell 76%, but capital expenditure rose 75% to 68 billion yuan, mainly due to AI infrastructure investments.
Burry Exited His BABA Position In June
In early April, Burry started a new position in Alibaba at just over 6% of his portfolio, telling his Substack followers that recent weakness in the shares offered an attractive entry point. However, in late June, he said he had sold his Alibaba stock and bought more JD.com, Adobe (ADBE), and Fiserv (FI).
He has since named JD as one of his three best positions, arguing that the money would rotate into Hong Kong and Chinese equities as enthusiasm for AI memory stocks continues to wane. Burry has also shorted Nvidia (NVDA), Micron (MU), Applied Materials (AMAT), and Palantir (PLTR) in AI and semiconductor stocks.
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