Alibaba shares fall 8% after $10 billion Hong Kong share sale

Business Recorder reported that Alibaba shares slid about 8% during early trading in Hong Kong on Monday, after the Chinese e-commerce and cloud company finalised a placement worth HK$80 billion ($10.21 billion). The new shares were sold at HK$112.70 each, with 710 million shares issued at a discount of 8.4% to the previous closing price. The proceeds are earmarked for artificial intelligence work, including building out related infrastructure.

According to the report, this is the biggest share sale of its kind ever made by a company listed in Hong Kong, and it ranks third worldwide so far this year, behind deals from Alphabet and Intel. The placement follows quarterly results released a week earlier, in which Alibaba said it had already used close to half of its three-year capital spending plan. Alibaba also now expects AI spending to pay back in two and a half years, shortened from three, because demand for its AI offerings is rising quickly, while quarterly net profit declined 75% year on year, mainly reflecting AI-related outlays.

Alibaba Cloud added a third facility in South Korea last week, raising its footprint to 104 availability zones spread over 30 regions. The expansion forms part of a plan Alibaba unveiled last October, under which it intends to commit 380 billion yuan ($56.54 billion) across three years to AI infrastructure.