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Alibaba Group Holding Ltd (NYSE:BABA) (NYSE:BABAF) announced plans to raise $4.5 billion through convertible bonds to fund share buybacks, amidst fierce competition and a slow Chinese economic recovery.
The bonds, maturing in seven years with a 0.5% coupon, could increase to $5.0 billion if additional notes are exercised. The initial conversion price is set at $105.04 per American depositary share, a 30% premium over Thursday's closing price of $80.80.
More on the offering here: Alibaba To Raise $4.5B Through Convertible Bonds For Share Buybacks Amid Fierce Competition, Slow Recovery
Despite this strategic move, Alibaba's stock closed down 2.27% on Thursday, and saw a further premarket decline of 0.75% by 8 a.m. ET on the following day.
Over the past year, Alibaba stock has dropped 2.51% but has gained 4.24% year-to-date.
The technical metrics for Alibaba present a mixed picture.
The stock price of $80.60 is below the 8-day SMA of $84.34, indicating a bearish signal, and is also below the 20-day SMA of $81.31, reinforcing a bearish signal.
However, the stock price is above the 50-day SMA of $75.93, suggesting a bullish signal. Additionally, the stock price exceeds the 200-day SMA of $78.95, indicating a bullish trend.
The Moving Average Convergence Divergence (MACD) indicator stands at 2.32, suggesting a bullish signal for Alibaba stock. The Relative Strength Index (RSI) is 51.27, indicating that the stock is neither overbought nor oversold.
The Bollinger Bands have the current price of $80.62 suggesting a bullish signal as it is trading in the upper band.
Alibaba's decision to issue convertible bonds for share buybacks amid a competitive e-commerce landscape and slow economic recovery is a strategic effort to enhance shareholder value.
The technical indicators have some mixed signals, with short-term moving averages indicating a bearish outlook, while longer-term indicators and MACD suggest bullish opportunities.
Read Next: What’s Going On With Alibaba Stock On Friday?
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