With the onslaught of the unfolding trade war between United States and China, the past six months had been a dark chapter for Alibaba share price. From USD208 in June 2018 to a low of USD132 in December 2018, Alibaba share price had experienced a terrifying loss of form. When will Alibaba share price rise from the ashes or has the bubble really burst for this iconic e-commerce giant?
To put things into perspective, Alibaba share price had increased substantially since the company got listed in 2014. Within a short span of time, Alibaba surged from IPO price of USD68 to a record USD208 in June 2018. But this is not to say that investors had a jolly good ride as the increase of Alibaba share price was nether linear nor exponential. As a matter of fact, Alibaba share price had gone through a period of soft landing, falling to a low of USD59 in 2015. However, the stunning entry of big boys from Singapore changed the dynamic of Alibaba share price forever.
Read my other articles on Alibaba share price: Dark Side of Alibaba Group.
Fairytale run of Alibaba share price
Singapore’s Temasek Holdings was an early investor of Alibaba and is currently the 5th largest shareholder. In 2016, both Temasek Holdings and GIC bought USD1 billion worth of Alibaba shares from Japan’ Softbank. The shares were purchased at USD74. The shares acquisition ignited a massive bull run for Alibaba share price, which surged to a record USD208 in June 2018. On looking back, it was a shrewd investment by Temasek Holdings and GIC.
However, Temasek Holdings began to pare down its stakes in Alibaba in 2017. As of 30 September 2018, Temasek Holdings held 28,988,503 Alibaba shares. Incidentally, the paring down of Temasek’s stake coincided with the widespread technology sell-offs in late 2018. Alibaba share price also lost steam and never looked back. Despite the meltdown of Alibaba share price, the management is confident about the growth story and has embarked on aggressive shares repurchase program. As of November 1, 2018, Alibaba Group had repurchased approximately 9.12 million of their shares for a total purchase price of approximately US$1.33 billion.
Given that Temasek Holdings entered when Alibaba share price was trading at USD74, the state-linked investment firm can still laugh all the way to the bank when it reduced stakes in Alibaba. Should investors follow the footstep of Temasek Holdings?
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