Michael Burry dumped Alibaba for a rival. Here’s why he no longer wants to buy back in.
Michael Burry has abandoned his Alibaba holding and transferred the entire position into rival JD.com, a move he disclosed in a Substack post on Sunday. The hedge‑fund manager, who rose to prominence by shorting the U.S. housing market before the 2008 crisis and was later portrayed by Christian Bale in “The Big Short,” said he originally intended to return most of the stake after a month or two but has now decided against it.
Burry Shifts to Jd.com
In the same post, Burry explained that the relocation of his Alibaba shares to JD.com also increased his ownership percentage in the competing Chinese e‑commerce platform. He did not provide a specific timeline for the new investment, but the shift signals a clear departure from his previous confidence in Alibaba’s stock.
Alibaba Announces $10.2 Billion Share Sale
On Sunday, Alibaba disclosed plans to raise 80 billion Hong Kong dollars—about $10.2 billion—by issuing 710 million new shares priced at 112.7 Hong Kong dollars each. The offering price represents an 8.4 percent discount to the company’s closing price on the preceding Friday. Alibaba said it will allocate the net proceeds to broaden its artificial‑intelligence capabilities and related infrastructure.
Burry Criticizes New Issuance
Burry wrote that he “cannot bless share issuances,” characterizing the sale as a “new paradigm” for Alibaba. He warned that the company’s return on invested capital is likely to continue declining under the new capital structure. Despite his criticism of the equity raise, Burry praised Alibaba’s technology efforts, noting that the firm is making “serious inroads” in the low‑cost large‑language‑model race in the United States and describing it as an “impressive” disruptive force.
AI Ambitions and Financial Results
Alibaba reported a 9 percent increase in revenue for the June quarter, yet net profit fell 75 percent as capital expenditure surged 75 percent to nearly $10 billion. The heavy outlay mirrors a broader AI arms race in which Microsoft, Amazon, Alphabet and Meta are each committing hundreds of billions of dollars to AI‑focused infrastructure, prompting investors to question how quickly those investments will generate returns.
Market Reaction and Challenges
Even with its AI push, Alibaba’s shares have struggled. The U.S.-listed stock trades more than 60 percent below its 2020 peak, a decline attributed to Beijing’s technology crackdown, a slowing Chinese economy, intense competition in e‑commerce, and ongoing geopolitical tensions. The pressure intensified on Monday in Hong Kong, where the stock slipped as much as 10 percent after the share‑sale announcement, underscoring market skepticism about the company’s financing strategy and its ability to translate AI spending into profitability.
Source: businessinsider.com · 2026-08-24