Alibaba has a message for investors nervous about its slowing growth and geopolitical uncertainty: We think our stock is cheap and we're putting our money where our mouth is
Shares of Alibaba rose more than 11% Tuesday after the Chinese e-commerce and cloud giant announced it was boosting the size of its share buyback program from $15 billion to $25 billion. Stocks typically go up on buyback news because repurchases lower the total number of shares outstanding, which boosts earnings per share. Investors also like to see companies invest in their own stock because it can send the signal that management believes the stock is a bargain.
Alibaba shares have surged 50% over the past five days. Investors are hoping that recent signs from Chinese president Xi Jinping about a loosening of restrictions on Chinese tech companies in an attempt to lift the country's stock market and economy will improve sentiment.But the stock is still down more than 3% this year and about 50% over the past 12 months.
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