Michael Burry, the investor known for his pre-2008 housing-market short, has exited Alibaba (BABA) entirely and rotated into a larger JD.com (JD) position, confirming the move on X. Burry said the turning point was Alibaba’s HK$80 billion, about $10.2 billion, share placement to fund AI infrastructure, which he described as a sign that 'issuing shares is now its new paradigm.' He added that Alibaba would need to fall about 50% before he would consider buying again.
The valuation divergence is stark. Alibaba trades at 25x trailing earnings with a negative 4.2% free cash flow yield and a 0.9% dividend yield, while JD.com trades at 8.3x forward earnings with a 10.7% free cash flow yield and a 3.3% dividend yield. Alibaba’s placement of 710 million new shares at HK$112.70 represented an 8.4% discount and roughly 3.7% dilution, sending its shares down nearly 10%. Alibaba’s net income fell from $17.83 billion to $15.35 billion even as revenue grew 8%. JD.com’s net income also declined from $5.67 billion to $2.81 billion, though analysts attributed that to spending on new ventures such as food delivery. Morgan Stanley downgraded JD.com to Underweight with a $28 price target, while Barclays warned of weakness in electronics and home-appliance demand as subsidies wind down.
In the following session, founder Jack Ma purchased more than HK$600 million of Alibaba’s Hong Kong-listed shares across consecutive open-market sessions. Chairman Joe Tsai and CEO Eddie Wu spent an additional HK$202 million, bringing combined insider buying to over HK$800 million over two days. The purchases follow Alibaba’s first new share issuance since 2019 and were seen by a source as reflecting 'strong confidence for Alibaba to realise its AI ambitions and capture the long-term growth opportunities ahead.' Alibaba’s Hong Kong-listed shares rose 1.5% in pre-market trading after the report.
