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Alibaba Skids as Citi Sees SEC Filing Signaling Sale by Softbank

(Bloomberg) — Alibaba Group Holding Ltd. shares slipped 3.6% in U.S. premarket trading after Citigroup Inc. analysts saw its additional American depositary share registration in the U.S. as a sign that SoftBank Group Corp. may intend to sell part of its stake.

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A stake sale by Softbank, a pre-initial public offering investor, would likely weaken sentiment toward Alibaba’s shares, battered last year along with other Chinese technology peers by Beijing’s regulatory crackdowns. The stock was 61% below its October 2020 highs as of Friday’s close, having slid as much as 65%.

SoftBank owns 5.39 billion ordinary Alibaba shares, equivalent to 673.76 million ADSs, or a 24.8% stake, according to Citi’s calculations. A potential stake sale could make sense for Masayoshi Son’s SoftBank, given pressure from investors in recent months as the value of many portfolio companies, including Didi Global Inc., One 97 Communications Ltd. and DoorDash Inc. was dragged lower by the technology downturn.

Alibaba filed a form on Friday with the Securities and Exchange Commission of the U.S. to register an additional one billion ADSs, each representing eight ordinary shares. The filing will allow its stockholders whose shares have never been registered with the regulator to have the flexibility to sell stock, Citi said. The registration could also cover the company’s need to issue new shares for an employee equity incentive plan.

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