Michael Burry Abandons Alibaba, Stock Falls 9% to $118.47
0h ago|5 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
alibabamichael-burry
Fazen Markets Editorial Desk
Collective editorial team · methodology
Trades XAUUSD on autopilot. Verified Myfxbook performance. Free forever.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The majority of retail investor accounts lose money when trading CFDs. AiX is informational software — not investment advice. Past performance does not guarantee future results.
Scaramucci’s SkyBridge Capital announced a new position in Alibaba Group Holding Ltd. on 24 August 2026, coinciding with a significant single-day decline for the Chinese e-commerce giant. Alibaba's stock price fell 9.24% to close at $118.47, after trading between $116.40 and $120.47. The sell-off occurred as markets digested the news of Michael Burry's Scion Asset Management abandoning its stake in the company, an event that underscores the heightened focus on management credibility among institutional investors. This price action places the stock near the lower end of its daily range, reflecting intense selling pressure.
Investor scrutiny of Chinese technology firms has intensified over the past three years, with corporate governance representing a critical factor in valuation models. The last major governance-related sell-off for Alibaba occurred in July 2025, when the stock declined 12% following unexpected changes to its cloud unit's leadership structure without clear shareholder communication. That event eroded approximately $40 billion in market capitalization over a two-week period.
The current macro backdrop features U.S. 10-year Treasury yields holding near 4.3%, maintaining pressure on growth-oriented equities globally. For U.S.-listed Chinese ADRs like Alibaba, this environment compounds existing geopolitical and regulatory risks. The specific catalyst for this price movement appears to be the signal sent by a high-profile investor’s exit, which amplifies existing concerns about management's adherence to public commitments.
Alibaba has been under pressure to improve shareholder returns through buybacks and strategic initiatives. Any perception that management is wavering on these pledges can trigger rapid de-risking by funds. The company's pledge to list its logistics and cloud businesses independently remains a key benchmark for investor confidence. Delays or alterations to this plan have previously resulted in negative analyst commentary and price volatility.
The timing is significant as it precedes Alibaba's annual shareholder meeting, typically held in late September. Institutional investors are now closely evaluating whether this sell-off reflects a fundamental shift in the investment thesis or a temporary sentiment-driven dislocation. Historical data shows that similar governance scares in 2024 led to buying opportunities, but only for stocks where management quickly reaffirmed its strategic roadmaps.
Alibaba's closing price of $118.47 represents a sharp decline from its 52-week high of over $180. The 9.24% single-day drop is more than double the average daily volatility of 4.1% observed over the past quarter. Trading volume reached 45 million shares, significantly above the 30-day average of 28 million shares, indicating broad-based selling rather than isolated liquidations.
| Metric | Today's Level | Change |
|---|---|---|
| Share Price | $118.47 | -9.24% |
| Daily Range | $116.40 - $120.47 | - |
| YTD Performance | -15% | - |
This performance starkly contrasts with the broader market. The Nasdaq Golden Dragon China Index, which tracks U.S.-listed Chinese companies, declined only 2.1% on the same day. Alibaba's year-to-date loss of 15% now underperforms the index's 5% decline. The company's market capitalization has fallen by approximately $55 billion since the start of the year, a figure that highlights the magnitude of capital flight from the single stock.
The price-to-earnings ratio for Alibaba has compressed to 12.5, down from a five-year average of 18.7. This valuation discount to U.S. peers like Amazon, which trades at a P/E of 35, reflects the perceived risk premium associated with its corporate structure and jurisdictional challenges. The stock's current price sits 8% below its 50-day moving average of $128.90, a technical level often watched by quantitative funds.
The sell-off has immediate implications for related equities and sectors. Chinese e-commerce peers JD.com and Pinduoduo saw milder declines of 3.5% and 2.8% respectively, suggesting the reaction is largely specific to Alibaba's governance news rather than a sector-wide de-rating. This divergence indicates that investors are making nuanced distinctions between management teams within the same industry. Capital flowing out of Alibaba may seek alternative China exposure through broader ETFs like the iShares MSCI China ETF (MCHI), which provides diversification across multiple sectors and corporate entities.
A counter-argument to the bearish thesis is that Alibaba's underlying business fundamentals remain intact. The company continues to generate substantial free cash flow, estimated at over $25 billion annually, which supports its aggressive share repurchase program. Some value-oriented funds may view this dip as an entry point, betting that the governance concerns are overstated relative to the company's cheap valuation and dominant market position. The risk is that prolonged uncertainty could lead to a structural re-rating, where the stock trades at a permanent discount to global peers.
Positioning data from futures markets shows a spike in put option volume on Alibaba, indicating that some traders are hedging against further downside. Large institutional long positions, however, appear to be holding steady, suggesting this event is viewed as a short-term shock rather than a terminal impairment of the investment case. Flow analysis points to net selling from hedge funds and buying from retail investors, a pattern often seen during capitulation events.
The primary near-term catalyst is Alibaba's Q2 2026 earnings report, scheduled for mid-September. Investors will scrutinize management's commentary for any official statement regarding its strategic pledges and capital allocation plans. Any deviation from the previously communicated roadmap for spinning off non-core assets would likely trigger another leg down in the stock price. Conversely, a reaffirmation of commitments could catalyze a relief rally.
Technical levels to monitor include the $115 support zone, which held during the July 2025 sell-off. A decisive break below this level on high volume could signal a test of the $100 psychological barrier. On the upside, the stock must reclaim the $125 level to suggest the selling pressure has abated. The 200-day moving average, currently near $135, represents a more significant resistance level that would need to be breached for a sustained bullish trend to develop.
Broader market conditions will also influence Alibaba's path. The next U.S. Federal Reserve meeting on September 20th will provide updated guidance on interest rates, which heavily impact the discount rates used to value growth stocks. any developments in U.S.-China trade relations or adjustments to the SEC's oversight of ADRs could shift the risk appetite for Chinese equities as an asset class.
The specific rationale for Michael Burry's exit through Scion Asset Management has not been publicly detailed. The trade disclosure coincides with a report highlighting a broken management pledge, suggesting corporate governance concerns may have been a factor. Scion is known for its fundamental, value-oriented approach, and such investors often sell when their thesis is compromised by unpredictable management actions. The sale does not necessarily reflect the financial health of Alibaba's core operations but signals a loss of confidence in leadership's strategic execution.
Alibaba's current price-to-earnings ratio of 12.5 is near a historical low, significantly below its five-year average of 18.7. The stock's price of $118.47 is approximately 35% below its 52-week high. This valuation compression reflects a combination of macroeconomic headwinds, sector-wide de-ratings for Chinese tech, and company-specific governance risks. The market capitalization has declined by roughly $55 billion year-to-date, indicating a substantial repricing of future cash flows despite consistent earnings generation.
AiX is our free MetaTrader 4 Expert Advisor. Verified Myfxbook performance. No subscription. No fees. XAUUSD breakout engine.
Trade 800+ global stocks & ETFs
Start TradingSponsored
Open a demo account in 30 seconds. No deposit required.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.