Alibaba Group (NYSE:BABA) is evaluating the possibility of utilizing Ant Group’s proposed share buyback program as a means to reduce its ownership stake in the company. Ant Group, which was founded by Alibaba’s former CEO Jack Ma, currently has Alibaba as its major shareholder with a stake of around one-third.
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Recently, Ant Group, a fintech company, announced its intention to repurchase up to 7.6% of its outstanding shares. This decision follows a $1 billion fine imposed by the Chinese government for violations related to consumer protection and corporate governance. Furthermore, the actions signify the conclusion of a lengthy regulatory investigation into the operations of Ant Group.
The buyback values Ant Group at 567.1 billion yuan ($78.5 billion). This represents a significant discount from its market capitalization of $150 billion approximately five years ago.
Importantly, two of Ant’s major shareholders, Hangzhou Junhan Equity Investment Partnership and Hangzhou Junao Equity Investment Partnership, have decided not to participate in the repurchase.
Is BABA a Good Stock to Hold?
Alibaba is actively working on the development of various AI tools, including large language models, to enhance its services. Interestingly, BABA has introduced a new AI image generator called Tongyi Wanxiang, which will initially be offered to enterprise customers in beta form. Furthermore, the Chinese government’s efforts to strengthen the country’s economy are expected to have a positive impact on Alibaba’s performance.
Currently, analysts have a Strong Buy consensus rating on BABA stock. This is based on 14 Buy and one Hold recommendations. The average price target of $141.87 implies 56.68% upside potential from the current level. The stock is down about 2% so far in 2023.
As per TipRanks data, the most accurate and profitable analyst for Alibaba is Loop Capital Markets analyst Rob Sanderson. Copying the analyst’s trades on this stock and holding each position for one year could result in 60% of your transactions generating a profit, with an average return of 15.46% per trade.
