Alibaba Ups Buyback Program to $10B; Street Firmly Bullish

E-commerce giant Alibaba Group announced that its board of directors has authorized an increase in the company’s share repurchase program to $10 billion from $6 billion.

Alibaba’s (BABA) upsized share repurchase program will be effective for a two-year period through the end of 2022. The company commenced the execution of its share repurchase program in the fourth quarter. The announcement follows a major sell-off in Alibaba shares last week after the Chinese market regulator announced the launch of an antitrust investigation into the company.

Specifically, China’s State Administration for Market Regulation is investigating Alibaba for monopolistic behavior, mainly the “choosing one from two” policy, which prevents merchants from offering products on rival platforms. (See BABA stock analysis on TipRanks)

On Dec. 24, Oppenheimer analyst Jason Helfstein reiterated a Buy rating on Alibaba with a $330 price target and stated, “We’d note that, even if the antitrust investigation outcome turns out to be unfavorable to BABA, the impact will likely be less meaningful than expected. Based on our understanding, most exclusive merchants on BABA maintain their exclusivity primarily due to BABA’s strong eCommerce ecosystem, and BABA’s exclusivity practice plays a less meaningful role.”

“In addition, we’d remind investors that, although the recent news indicates the Chinese government is tightening the regulations on big Internet platforms including BABA, the new rounds of regulations merely aim to achieve the long-term sustainable growth of the sector through promoting fair competition, not to suppress it,” added Helfstein.

The rest of the Street echoes Helfstein’s bullish sentiment, with a Strong Buy analyst consensus based on 22 unanimous Buys. The average price target of $338.47 indicates upside potential of 52.5% from current levels. Shares have risen 4.7% year-to-date.