Alibaba SEC Filing May Signal Softbank Plans To Sell, Citi Says

Based on regulatory filings, analysts believe SoftBank is preparing to sell some or all of its large interest in Alibaba.

Alibaba SEC Filing May Signal Softbank Plans To Sell, Citi Says
Photo by Getty Images

Alibaba’s stock dropped 6% on Monday, to rumours that SoftBank may be planning to sell a portion of its shareholding in the Chinese Internet and e-commerce giant. The company filed a form with the Securities and Exchange Commission of the United States (SEC) last Friday, to register an additional of 1 billion American depository shares (ADS), according to Citi's internet analyst Alicia Yap. This could be an indication that SoftBank plans to sell part of its 5.39 billion Alibaba's ordinary shares. The Japanese investment group run by Masayoshi Son owns the equivalent of almost 673 million U.S. shares of Alibaba, which is the majority of the ADSs the business has lately filed, and invested in the company before it went public. As a result, many of its holdings are unlikely to be registered as American depositary shares, according to the analyst.

"While we believe a portion of the new registration could indicate future new shares to be granted according to the employee equity incentive plan, we also feel it could indicate SoftBank's intention to sell," Yap and her team wrote.

Masayoshi Son’s SoftBank has been under fire in recent months as the value of many of its portfolio companies has fallen due to the technology downturn. SoftBank's stock has lost roughly half of its value from its peak last year, as the value of its holdings, such as Didi Global Inc, One 97 Communications Ltd, and DoorDash Inc, has declined. The Japanese company has previously utilised stock buybacks to boost its own shares. Alibaba is by far the company's most valuable asset.