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Michael Burry’s BABA bet to finally pay off as Alibaba plans massive buyback in 2024

Michael Burry’s BABA bet to finally pay off as Alibaba plans massive buyback in 2024

Much has been said about ‘the Big Short’ Michael Burry’s decision to bet approximately $4.3 million on the fortunes of the Chinese technology and e-commerce giant Alibaba (NYSE: BABA) in September 2023.

The investment has been of particular interest given that in the 7 months since the purchase of 75,000 BABA shares, the stock has declined significantly and is, despite the partial recovery of the Chinese stock market following government intervention, still below its September value.

Things, however, may soon start changing for Alibaba as well as for Burry’s investment as the Chinese company appears poised for a climb through the rest of 2024.

Why Alibaba stock is likely to rise in 2024

Depending on one’s outlook, a recent email sent by Jack Ma, the CEO of Alibaba, to his employees, in which he expresses his satisfaction with the company’s current direction can either be interpreted as a sign of good things to come, or as a last-ditch effort to boost internal morale.

Still, given Alibaba’s continued efforts to restructure and better take advantage of the artificial intelligence (AI) boom that have been ongoing since late last year, the former interpretation appears more likely.

Beyond the business model itself, Alibaba stock appears set for significant gains given that the firm has recently unveiled a massive, $25 billion share buyback plan. 

The program already saw the firm purchase 2.6% of all of its shares in the first quarter of 2024 and is on track to reacquire a full 10% by the year’s end.

Alibaba stock price chart

While the share buyback program may help rocket BABA stock in the long run, its performance in 2024 so far has been less than stellar and marked with significant volatility.

Indeed, despite all the turbulence, Alibaba shares have ultimately hardly moved between January 2 and the closing of the last full trading day and are 0.12% in the green year-to-date (YTD).

BABA stock YTD price chart. Source: Google

Still, despite being 1.59% in the red in the last 30 days, the recent announcement of the buyback program and Ma’s email have helped BABA climb 4.39% on the weekly chart.

At Thursday’s close, the stock stood at $74.85 after a 0.35% daily rise but Alibaba price today, at press time, is $73.20 after a 2.20% extended trading session fall.

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