Alibaba Raises $10.2 Billion in Discounted Hong Kong Share Sale to Fund AI, Shares Plunge 8%

Alibaba priced Hong Kong's largest-ever secondary share offering on Monday, selling 710 million new ordinary shares at HK$112.70 each to raise HK$80 billion, equivalent to $10.2 billion. The placement price represented an 8.4% discount to Friday's closing price of HK$123, with the sale set to close by August 26. Proceeds are earmarked for full-stack AI infrastructure development.

Hong Kong-listed shares fell as much as 11% intraday, touching HK$111, their lowest since July 30, before settling down roughly 8%. Alibaba ADRs slid about 2% in U.S. premarket trading. The selloff reflects investor unease over dilution and the uncertain returns from heavy AI spending, concerns sharpened by a 75% drop in Alibaba's quarterly net profit disclosed alongside the raise.

Sixteen analysts revised earnings estimates downward following the announcement. 'Big Short' investor Michael Burry fully exited his Alibaba position in favor of JD.com, stating 'I cannot bless share issuances,' and separately indicated he believes the stock needs to fall by roughly half again from current levels. On the day of the offering, Alibaba also officially launched Wan3.0, its latest AI video generation model, and disclosed that its open-weight models have surpassed 3 billion global downloads in the past six months, outpacing Meta and Alphabet.

In a show of confidence, Alibaba's top two executives purchased approximately HK$120 million ($15.3 million) worth of shares after the stock slumped, with CEO purchases separately reported at $4.98 million. CFO Toby Xu had told investors on August 20 that Alibaba held roughly $30.7 billion in net cash excluding long-dated debt, with a broader net cash position of approximately $46.5 billion. Separately, law firm Kaplan Fox announced a securities class action against Alibaba on behalf of investors who bought shares between June 26, 2025 and June 24, 2026, with an October 5, 2026 deadline to join.

Alibaba also participated as a strategic investor in Xpeng Robotics' $900 million funding round, which valued the humanoid-robot unit at $6.3 billion.