New Bullish Catalysts Have Emerged

Alibaba (NYSE:BABA), the Chinese tech giant, disappointed investors in 2023 while many of its American counterparts delivered strong returns. Alibaba stock has declined almost 40% in the last 12 months, but new catalysts have emerged to drive the stock higher in 2024. Although regulatory risks need to be monitored carefully, I am bullish on Alibaba stock.

SoftBank Finally Completes Divesting Alibaba

SoftBank (OTC:SFTBF), the Japanese investment firm led by billionaire Masayoshi Son, was one of the first institutional investors to believe in Alibaba. The investment firm invested $20 million in Alibaba in 2000. In late 2021, SoftBank entered into a forward contract with its subsidiary Skybridge to divest its Alibaba stake. This contract allowed SoftBank to repurchase Alibaba shares from Skybridge if needed.

On January 25, SoftBank announced the settlement of these prepaid forward contracts with Skybridge, reportedly booking a profit of around $8.5 billion from its investment in Alibaba. The investment firm has decided not to purchase or sell any new Alibaba shares in the foreseeable future. The firm currently owns a minor stake in Alibaba of approximately 0.5%, in contrast to an ownership stake of 32% back in 2021.

From a technical perspective, the massive selling pressure created by SoftBank over the last couple of years acted as a barrier for Alibaba stock to trend higher despite the company spending massive amounts on share buybacks. For reference, the company spent $10.2 billion on stock repurchases in the last 12 months.

Going forward, it seems reasonable to assume that buybacks will finally create a positive impact, assuming the company continues to perform well financially.

The Founder and President Are Betting on Alibaba

On January 23, SEC filings revealed that Alibaba founder Jack Ma and current Chairman Joe Tsai both purchased company shares, indicating their improving sentiment toward the company’s prospects at a time when SoftBank is exiting its investment….