Alibaba (BABA) Stock: Company Raises $3 Billion as Analyst Boosts Price Target

TLDR

Table of Contents

Alibaba raises $3.2 billion through convertible notes offering, the year’s biggest such deal
Jefferies raises BABA price target to $178 from $165, maintaining Buy rating
Company plans to spend proceeds on AI infrastructure, data centers, and international expansion
Strong investor demand with interest several times the offering size
Cloud business showing strong growth potential with rising AI-related revenue

Alibaba Group Holding Ltd. completed a $3.17 billion convertible notes offering this week. The deal marks the year’s largest convertible bond issuance as Chinese tech companies scramble for capital.

The zero-coupon convertible notes mature in 2032. They convert into American depositary receipts at a 31.25% premium to Thursday’s closing price.

Investor appetite proved strong with demand several times the offering size. Alibaba shares closed at HK$143.30 in Hong Kong on Thursday, up 0.4%.

The fundraising comes as Jefferies raised its price target on BABA to $178 from $165. The investment firm maintained its Buy rating on the stock.

Jefferies cited expectations for strong cloud business execution. The firm sees continued growth in AI-related revenue for Alibaba Cloud.

Capital Deployment Strategy

Alibaba plans to use the convertible bond proceeds for multiple purposes. The company will scale up data centers and upgrade technology infrastructure.

International commerce operations will also receive funding. Alibaba previously announced plans to spend $53 billion over three years on AI infrastructure.

The Hangzhou-based company faces fierce competition in China. Rivals include Meituan and JD.com in various market segments.

Earlier this week, Alibaba committed another 1 billion yuan in incentives. The funds target driving more traffic to its popular online services.

Cloud Business Momentum

Jefferies expects Alibaba Cloud’s AI-related revenue to maintain rapid growth. External revenue contribution continues rising within the cloud division.

The analyst firm noted synergies between Quick Commerce and conventional e-commerce operations. User experience improvements continue across Alibaba’s platforms.

Street Stars launched through Amap represents another lifestyle services advancement. The release adds to Alibaba’s diverse digital ecosystem.

Market Context

Chinese tech companies are raising capital at an accelerated pace. Baidu raised 4.4 billion yuan from dim sum bonds this week following a 10 billion yuan March issuance.

Tencent Holdings considers its first public debt offering in four years. The company may issue offshore yuan bonds this month.

Asian convertible bond sales are heading toward multiyear highs in 2025. The instruments offer cheaper capital than traditional debt in current market conditions.

China Pacific Insurance raised HK$15.6 billion through convertible bonds recently. The trend reflects broader corporate funding needs across sectors.

Investment banks are benefiting from the fundraising boom. Barclays, Citigroup, HSBC, JPMorgan, Morgan Stanley and UBS worked on Alibaba’s latest offering.

Alibaba previously raised $5 billion in convertible bonds last year. That deal set a record for dollar-denominated Asian company issuances at the time.

The latest convertible notes include a 90-day lock-up period from pricing. This prevents the issuer from taking certain actions during the initial trading period.

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