Alibaba’s pushy shareholder mistimes his moment

World Artificial Intelligence Conference in Shanghai
A person walks past a sign of Alibaba Group during the World Artificial Intelligence Conference, following the coronavirus disease (COVID-19) outbreak, in Shanghai, China, September 1, 2022. REUTERS/Aly Song

HONG KONG, Jan 18 (Reuters Breakingviews) - The U.S. investor behind activist campaigns at meme-stocks such as GameStop (GME.N) is going after China’s $305 billion e-commerce giant. He may not get far.

Ryan Cohen has been pressing Alibaba (9988.HK), for improvements since last August, per the Wall Street Journal. As the owner of an undisclosed stake, he wants the company to boost its share buybacks. There are similarities with cash-rich Apple (AAPL.O) where he owns roughly $800 million of stock. Alibaba is sitting on $48 billion of net cash as of September, up 4% since March.

It confirms Alibaba’s emerging status as a mature company: revenue growth is forecast to almost halve to 10% by 2025, per Refinitiv. But the case for buybacks was stronger before the stock nearly doubled from an October trough, when Beijing began easing its tech crackdown, scrapped Covid-19 restrictions, and as tensions over audits on U.S. listed Chinese companies thawed. Increasing share purchases as the storm settles, and as an obstacle in the company’s growth path clears, would be odd.

Past signs suggest Beijing would not work too hard to prevent overseas meddling, barring national security concerns. Foreign shareholders have successfully challenged buyout prices at smaller companies. Cohen’s move may have bad timing stacked against it more than anything else. (By Yawen Chen)

Alibaba's share price is in recovery mode

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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Editing by Una Galani and Thomas Shum

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