Alibaba’s 29% Drop Hits Billionaire Jack Ma Hard, But Michael Burry Quietly Ups His Stake

Remember Jack Ma? The billionaire who once ruled the headlines before China decided to make him disappear for a bit and hacked away half his net worth for daring to criticize the government? 

(Source: CNN)

Well, he’s back in the news, and let’s just say it’s not for a triumphant return. This morning, Alibaba reported a brutal 29% drop in quarterly profit.

China’s trying to get back on its feet, but it’s looking more like a wobbly toddler than the second largest economy in the world. With the property market looking like it’s teetering on the edge and job insecurity making everyone nervous, consumers are holding back on spending. And guess who’s feeling the pinch? Alibaba. Its core businesses, Taobao and Tmall, just reported a 1% drop in sales for the June quarter—a small dip, but a big deal when you’re used to being the go-to for online shopping.

The real surprise? Just like middle-class Americans are ditching Amazon for Temu, Chinese shoppers are flocking to Pinduoduo, the new favorite for discounts, and leaving Alibaba’s pricier options untouched. This shift is turning up the heat on Alibaba, which is already struggling to fend off fierce competition from JD.com and other rivals.

There’s one part of Alibaba that even the Chinese government couldn’t slow down—the cloud computing division. This side of the business managed to see a 6% revenue bump, adding about $3.6 billion to the bank. So, if their e-commerce empire keeps tanking, who knows? Maybe AI will swoop in and play the hero.

While Alibaba is under fire, some big players are seeing this as an opportunity. he guy who famously called the 2008 housing market crash while probably lounging barefoot in his office, the same crash that gave our parents a decade of financial PTSD—has been quietly increasing his stake in Alibaba. In the second quarter, Burry’s investment firm, Scion Asset Management, boosted its position in Alibaba to $11.2 million, up from $9 million in the previous quarter.

Why should you care? Because Burry isn’t your typical Wall Street sheep. If he’s throwing more cash at Alibaba, he’s seeing something the rest of the market’s too busy panicking to notice. Maybe he’s banking on Alibaba’s cloud division, which is pretty much the only part of the company that’s not getting kicked around. Or maybe he’s got faith in CEO Eddie Wu’s master plan—whatever that might be. Either way, Burry’s doubling down on a company that’s currently playing dodgeball with bad press.

While it’s too early to say whether Alibaba’s fortunes will improve, the fact that investors like Burry are increasing their stakes is a sign that there could be more to this story. Probably. But the fact that smart money like Burry’s is getting in deeper means there’s more going on here than meets the eye.

Stock.News has positions in Amazon.