Alibaba Shares To Buyback, Signs Of Covid Ease

(Bloomberg) — Shares of Alibaba Group Holding Ltd. rose. after the Chinese e-commerce giant unveiled a new buyback plan and suggested that Covid-19 restrictions are starting to ease enough to benefit its business.

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The stock was up as much as 6.4% in Hong Kong trading on Friday morning.

Alibaba reported a surprise net loss for the quarter as it marked down investment holdings, but offered support to investors on other fronts. The company approved a $15 billion expansion to an existing $25 billion buyback program extending the duration to 2025. Executives also expressed optimism about lifting pandemic restrictions.

“With the introduction of the 20-point pandemic measures by the state authorities, it can be expected that this will have a positive impact. We certainly notice some disruptions to logistics in certain regions of the country,” Chief Executive Officer Daniel Zhang told analysts on a post-earnings conference call. “But overall we expect things to continue to improve in a positive direction.”

The Chinese e-commerce leader reported a net loss of 20.6 billion yuan ($2.9 billion) compared with forecasts for a profit of almost the same amount, after it valued investments across a portfolio that includes Didi Global Inc. and mark down Indonesia’s GoTo. Adjusted Ebitda rose 24% for the quarter, a metric analyst at Jefferies showed as a sign of progress.

“We believe it is well-positioned to embrace the reopening story ahead, thanks to its large and attractive user base as they seek to achieve successful customer segmentation strategies along with broad product options,” wrote the analysts at Jefferies .

Alibaba Viewed as Recovery Story Despite Revenue Missing: Street Cover

Revenue rose a slightly less-than-expected 3% to 207.2 billion yuan in the September quarter, after cloud sales — the company’s biggest growth driver in recent years — slowed slowest ever.

Still, investors point to signs that the Xi Jinping administration is backing away from its Covid Zero framework and supporting growing tech firms. Although it is early, there are steps that suggest a refocusing on the private sector and the No. 1 economy. 2 to revive the world.

“We believe that Covid will eventually pass, our society, our economy, and our lives will eventually return, and China’s enormous potential as the world’s second largest economy will be further unleashed,” Zhang said.

Bernstein analysts including Robin Zhu gathered Shakespeare to capture the drama of Covid policies in Beijing. “The whole world is a reopened drama?” they wondered in a report after Alibaba’s earnings.

“All the Chinese ADRs are a reopened drama, all the local governments are just players; there is their way out and their way in; and one man in his time plays many parts…,” they wrote.

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