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Major Story (7/10)
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Alibaba Raises $10.2 Billion for AI, Stock Drops 10% on the News
Alibaba wanted $10.2 billion for AI. It got the money. Investors made it pay for it.
The Chinese e-commerce and cloud giant announced Sunday it would raise HK$80 billion, about $10.2 billion, by issuing 710 million new shares at HK$112.70 each, according to SCMP and Reuters (carried by WTVB-AM). That price is an 8.4% discount to Friday's Hong Kong close of HK$123, and a 3.6% discount to Friday's close for its New York-listed shares.
The market reaction was immediate and ugly. Alibaba's Hong Kong shares fell as much as 11% in Monday trading, according to LiveMint, before settling down roughly 10% at HK$111.00 by the end of morning trade, per Reuters. CNBC reported shares were last trading 8.4% lower at HK$112.70. Every dollar of the raise is earmarked for what Alibaba calls its "full-stack AI capabilities," including chips, models and infrastructure.
The Money Showed Up Anyway
SCMP reported the deal was nearly three times oversubscribed, pulling in $28 billion in demand against a $10 billion target. Reuters reported that $6 billion of that demand came from long-only and sovereign investors, with roughly 40% of the final book going to that category, citing sources who said sovereign wealth funds from Europe, Asia and the Middle East participated.
Sources used for this briefing
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