Alibaba’s Hong Kong shares drop 5% after report of possible $5 billion convertible bond sale

Hong Kong-listed shares of Alibaba fell over 5% Thursday following a report that the Chinese tech giant is considering selling convertible bonds to raise $5 billion.

Shares ended the trading day 5.24% lower, after falling more than 6% earlier following the Bloomberg report.

In premarket trading in New York, Alibaba’s NYSE-listed shares were down 2.03% at 05:44 a.m. ET.

The company was the third worst performer of the Hang Seng index on the day, according to LSEG data.

Bloomberg, citing anonymous sources, said that a bond offering could emerge as soon as this week.

CNBC could not independently confirm the report, and Alibaba did not immediately respond to a request for comment.

Earlier this week, Chinese e-commerce rival JD.com took a similar step with a $1.75 billion convertible senior note offering due in five years with a 0.25% coupon.

Alibaba weathered a stormy 2023 that included an expansive corporate structure overhaul and culminated in an 86% tumble in fourth-quarter net profit.

In a bid to draw investors on the side, the company in February announced it was bolstering the size of its share buyback program by $25 billion.

Earlier this year, Alibaba CEO Eddie Wu pledged to “reignite” growth in the company with further investments. Early signs point to this strategy taking hold in the March quarter.

Further capital could boost the company’s activities in its core e-commerce sector, where it has contended with a domestic slowdown driven by cautious spending among Chinese consumers. The broader Chinese economy embarked on a sluggish recovery from spartan Covid-19 restrictions, with the latest official figures pointing to a 11.5% year-on-year hike in Chinese online retail sales, according to Chinese state news agency Xinhua.

Alibaba also maintains ambitions of capturing further market share in the hotspot market of artificial intelligence and cloud services. The company released the latest version of its Tongyi Qianwen large language model — a software that can power artificial intelligence applications — earlier this month, following the launch of the technology’s first iteration in April 2023.

It recently joined an escalating price war in China by slashing costs up to 97% on a range of its LLMs, Reuters reported.

Alibaba shares have trended higher in the year to date, adding 4.03% on the Hong Kong Stock Exchange and 6.67% in the New York bourse.

— CNBC’s Arjun Kharpal contributed to this report