Alibaba rises as SoftBank says it will not sell stake in the company
Feb. 09, 2022 8:04 AM ET Alibaba Group Holding Limited (BABA), SFTBY By: Chris Ciaccia, SA News Editor 4 Comments
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Alibaba (NYSE: BABA) shares rose in premarket trading on Wednesday after SoftBank ( OTCPK:SFTBY) said there was no link between Alibaba's decision to register 1 billion new American depository shares, or ADS, and it selling the stake it owns in the company.
"The registration of the ADR conversion facility, including its size, is not tied to any specific future transaction by SBG," SoftBank told Reuters.
Alibaba shares rose nearly 1% to $123.07 in premarket trading on Wednesday.
The news outlet added that SoftBank's Chief Executive, Masayoshi Son, told analysts he was "surprised" by the decision and had not requested the filing, citing a person familiar with the situation.
In the past, SoftBank has used its Alibaba shares as collateral for loans.
On Monday, Citi analyst Alicia Yap said Alibaba's decision could have been a sign that SoftBank intends to sell some of the 5.39 billion Alibaba ( BABA) ordinary shares it owns. Citi said that SoftBank's stake is the equivalent of almost 674 million ADSs, or nearly 24% of Alibaba ( BABA).
On Wednesday, Citi's Yap said in a new note that Alibaba may have registered the filing in conjunction with converting Hong Kong-listed shares to those in New York. Yap has a buy rating and $216 price target on Alibaba.
Last Friday, Alibaba ( BABA) filed with the U.S. Securities and Exchange Commission to register 1 billion new ADSs, with each of those representing eight ordinary shares of Alibaba ( BABA) stock. Yap said what makes the ADS registration unique is that it doesn't indicate the issuing of new stock, and holders of ordinary stock that hasn't been registered with the SEC will be able to sell their shares in ADS instead of as ordinary shares on the Hong Kong Stock Exchange.
Last week, Mizuho Securities analyst James Lee cut his price target on Alibaba ( BABA) on the grounds that the company recently completed a challenging business quarter. |
