Burry Dumps Alibaba: Calls Valuation Too High, Shifts to JD.com
Nashnova编辑部
Michael Burry has exited his entire Alibaba position, saying the stock needs to fall another 50% before he'd look again, and announced plans to build a "massive" stake in JD.com instead.
Why did Burry flip so fast?
Burry only opened his Alibaba position in April this year — and dumped it all less than six months later.
He posted two reasons on Substack: he considers the stock overvalued, and he explicitly opposes the company's share-issuance plan, writing "I cannot endorse the share issuance."
This means → his concern goes beyond price. He believes Alibaba's plan — raising massive capital to pour into AI — will keep diluting existing shareholders' returns.
How big is this Alibaba share sale?
Alibaba announced a placement to raise roughly HK$80 billion (≈US$10.2 billion) for artificial-intelligence investment.
It is the largest-ever follow-on offering by a listed company in Hong Kong.
The placement was priced at HK$112.70 per share, an approximately 8.4% discount to Friday's Hong Kong close of HK$123. In plain terms = new shares are sold at a markdown, diluting existing holders — their stake is worth less.
Can Alibaba's financials support this spending?
For the quarter ending in June, Alibaba's net profit plunged 75% year-on-year, driven by a surge in AI-related capital expenditure.
This reflects a broader worry: Chinese tech giants are collectively betting big on AI, but near-term returns are nowhere close to materializing — profits are being burned through.
On the stock-price side, Alibaba's U.S. ADR is down 18.6% year-to-date, including an 8.6% drop on Friday alone; its Hong Kong-listed shares have fallen 13.9% this year.
He's moving into JD.com — what's the bet?
Burry said he is redirecting the Alibaba proceeds into JD.com and plans to build a "massive" position.
This means → he is not bearish on Chinese tech as a sector. He is switching horses within the same race — away from what he sees as an overpriced, cash-burning Alibaba, toward a JD.com he considers better value.
Burry rose to fame by shorting the U.S. housing market before the 2008 financial crisis; his portfolio moves are closely tracked. His explicit bearish call on Alibaba, combined with the dilution pressure from the placement, will be a key variable for Alibaba's stock in the near term.
Content is for reference only, not financial advice.