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BABA Holds Near Placement Price After Record $10.2B Follow-On, Reddit Questions Fair Value

Alibaba's stock has barely budged from its HK$112.70 share-issuance price four sessions later, prompting Reddit debate about whether the market has already priced in dilution from the largest-ever Hong Kong follow-on.

  1. Alibaba raised $10.2 billion in the largest primary follow-on ever by a Hong Kong-listed company, pricing 710 million new shares at an 8.4% discount.

  2. Four sessions later, BABA trades just HK$1.20 above the placement price, suggesting the marginal buyer sees the enlarged share count as fairly valued.

  3. Michael Burry exited his BABA position, citing dilution and falling ROIC from AI spending, rotating into JD.com.

BABA
$BABA has been the subject of intense debate on r/stocks after pricing a record $10.2 billion Hong Kong follow-on offering at an 8.4% discount last week. The stock closed at HK$113.90 on August 28, barely above the HK$112.70 placement price, leading one top-voted post to argue that the market has already absorbed the dilution and is treating the enlarged share count as fairly valued.

The post detailed the price action: BABA closed at HK$123.00 on August 21, then dropped to HK$112.50 on the offering date, touching a low of HK$110.10. Over the next four sessions, the stock recovered only modestly to HK$113.90. The author concluded that the marginal buyer is calling HK$112.70 fair for the enlarged share count, meaning the company's compute budget is being carried at cost rather than generating a premium.

BABA

Adding to the bearish narrative, Michael Burry's Scion Asset Management sold its entire

BABA
$BABA position during the second quarter, according to a recent 13F filing. The move was reportedly driven by concerns over dilution from the share issuance and falling return on invested capital as Alibaba ramps up AI spending. Burry rotated the proceeds into
JD
$JD, another Chinese e-commerce giant.

On the same day, a securities fraud lawsuit was announced against Alibaba by Schall, Brown & Schwartz LLP, alleging the company made false and misleading statements regarding its control by the Chinese Ministry of Industry and Information Technology and undisclosed AI model distillation activities. The class period runs from June 26, 2024 to June 24, 2025, with an October 5 deadline for investor participation.

Despite the headwinds,

BABA
$BABA remains a top-10 ticker on Tendie.bot by discussion volume, with 8 posts and 16 comments on August 28. Sentiment was slightly positive at 0.16, though the r/ValueInvesting community showed stronger bullish leanings, with an average sentiment of 0.70 across 40 posts.

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