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Hong Kong-listed shares of Alibaba fell over 5% on Thursday following a report that the Chinese tech giant is considering selling convertible bonds to raise $5 billion. The shares ended the trading day 5.24% lower, after falling more than 6% earlier following the Bloomberg report. In premarket trading in New York, Alibaba’s NYSE-listed shares were down 2.21% at 04:51 a.m. ET. Bloomberg, citing anonymous sources, said a bond offering could emerge as soon as this week. CNBC could not independently confirm the report, and Alibaba did not immediately respond to a request for comment.

Earlier this week, Chinese e-commerce rival JD.com took a similar step with a $1.75 billion convertible senior note offering due in five years with a 0.25% coupon. Alibaba has endured a tumultuous 2023, which included an expansive corporate structure overhaul and culminated in an 86% drop in fourth-quarter net profit. In an effort to attract investors, the company announced in February that it was increasing the size of its share buyback program by $25 billion. The situation is still developing as this breaking news story is being updated.

The stock market response to the news of Alibaba’s potential $5 billion bond offering has been significant, with shares falling over 5% in Hong Kong and over 2% in premarket trading in New York. This indicates that investors may have concerns about the company’s decision to raise funds through convertible bonds. The report of Alibaba’s bond offering comes shortly after Chinese e-commerce rival JD.com announced a similar move, raising $1.75 billion through convertible senior notes. It remains to be seen how Alibaba’s bond offering will be received by the market and what impact it will have on the company’s financial position.

Alibaba’s decision to consider selling convertible bonds to raise $5 billion may be a strategic move to strengthen its financial position and accelerate its growth plans. The company has faced challenges in 2023, including a significant drop in fourth-quarter net profit and a reorganization of its corporate structure. By raising funds through convertible bonds, Alibaba may be able to invest in new initiatives, expand its business operations, or address potential liquidity issues. However, the market reaction to the news suggests that investors have reservations about the company’s decision and its potential implications.

The timing of Alibaba’s bond offering is significant, as it comes at a time when the company is facing increased scrutiny from regulators and investors. The Chinese tech giant has been the subject of regulatory investigations and crackdowns in recent years, which have raised concerns about its business practices and compliance with regulations. In this context, Alibaba’s decision to raise funds through convertible bonds may be seen as a way to strengthen its financial position and demonstrate its commitment to financial stability. However, the market response to the news indicates that investors may have reservations about the company’s strategy and its potential impact on its future prospects.

Despite the uncertainties surrounding Alibaba’s bond offering, the company has a track record of resilience and innovation that may help it navigate the challenges ahead. Alibaba has a strong market position in China and a diverse portfolio of businesses, including e-commerce, cloud computing, and digital entertainment. The company’s decision to increase the size of its share buyback program earlier this year may also be seen as a positive sign of its commitment to creating long-term value for shareholders. As the situation continues to unfold, it will be important to monitor Alibaba’s financial performance and strategic moves to assess its prospects for growth and profitability in the coming months.

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