Meme Stock Icon Cohen Buys Into Alibaba in Rare China Activism

(Bloomberg) — Meme-stock investor Ryan Cohen has taken a stake in Alibaba Group Holding Ltd. and is pushing the e-commerce leader to buy back more of its shares, in a rare case of activism targeting a prominent Chinese firm.

Most Read from Bloomberg

Cohen, who rallied individual stock investors to help propel shares of moribund companies like GameStop Corp., built up a stake worth hundreds of millions of dollars in the second half of last year, a person familiar with the matter said, asking not to be identified discussing private communications.

The entrepreneur, who became an idol to amateur investors after championing well-known but languishing stocks like Bed Bath & Beyond Inc., contacted Alibaba’s board in August to make the case its shares were undervalued, the person said, confirming a report in the Wall Street Journal. That’s based on a view it can achieve double-digit sales growth and almost 20% growth in free cash flow over the next five years.

Such a performance would require a return to the scorching growth rates that China’s largest e-commerce company once routinely delivered — before it became a high-profile target of Beijing’s crackdown on technology giants. The government in 2021 forced Alibaba and peers like Tencent Holdings Ltd. to revamp business practices, wiping out top-line growth at a time Covid Zero curbs weighed on the economy. The company co-founded by billionaire Jack Ma posted a surprise loss in its latest quarter, as revenue again barely grew.

But Cohen is getting in at a potential inflection point for the world’s No. 2 economy.

From Goldman Sachs Group Inc. to Morgan Stanley, a growing number of strategists have made bullish calls following Xi Jinping’s Covid Zero exit and vows to end a clampdown on the tech sector. The shifts have spurred a roughly 60% rally in the Hang Seng Tech Index since an October trough, a world-beating feat even though the gauge’s market value is still half of its February 2021 peak.

Story continues

“Cohen’s entry can be broadly positive for Alibaba’s stock and given his wide following it…


Read More

Recommended For You

Leave a Reply

Your email address will not be published. Required fields are marked *