Alibaba (NYSE:BABA) caught the fancy of activist investor Ryan Cohen, who built a small but fat stake in the company in 2H22, confirmed The Wall Street Journal. The stake is said to be worth hundreds of millions of dollars. Moreover, he is reportedly nudging the Chinese e-commerce giant to enhance its share repurchase program.
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Cohen believes that Apple (NASDAQ:AAPL) can serve as a good example for Alibaba. The iPhone maker has repurchased shares worth hundreds of billions of dollars in the past decade, resulting in a massive surge in stock prices.
The meme-stock king gained popularity in the last few years for being the largest individual investor in Apple and sparking crazed surges in GameStop’s (NYSE:GME) shares. His trading patterns are closely followed by individual investors, making his portfolio update good news for Alibaba. The company’s shares had been depressed for most of 2022 due to a decline in consumer demand in China in the wake of relentless COVID-19 cases and the nation’s crackdown on technology stocks.
Following communication with Cohen, in November last year Alibaba announced the approval of its board for expanding the existing share-repurchase program by $15 billion. Additionally, the program was extended through March 2025. As of November 16, the company had repurchased about $18 billion of its shares under the existing buyback plan.
Cohen believed Alibaba’s shares were deeply undervalued for a company that has the potential to achieve double-digit sales and around 20% free cash flow growth over the next five years. He expressed this view to the company’s board in August last year.
Is BABA a Buy or Hold?
BABA stock enjoys a Strong Buy consensus rating based on 16 resounding Buys. The average price target of $138.53 indicates that the price can increase 18.42% over the next 12 months.
