Vipshop Stock Jumps 14% on $500 Million Share Buyback

With the recent sell-off, analysts see a buying opportunity on Chinese tech stocks.
Anthony RussoMar 30,2021,16:15

Shares of Vipshop (NYSE: VIPS) surged 14% intraday Tuesday on its announcement of a stock buyback plan of up to $500 million.

The Guangzhou-based online retailer said in a statement today that its proposed repurchases could be made “time to time in the open market at prevailing market prices.” The repurchase plan will last 24 months, the report said.

Vipshop has watched its stock fall 29% since Mar. 23. Over the past week, many Chinese U.S-listed firms tumbled in trading as trade tensions between Washington and Beijing have worsened and Chinese listings in New York came under threat.

The news from Vipshop today follows a $1 billion stock buyback plan that music conglomerate Tencent Music Entertainment Group (NYSE: TME) announced on Monday. Shares in Tencent have dropped 31% over the past few days.

Also, China’s largest search engine Baidu (NYSE: BIDU; HKEX: 09888), which has watched its shares plunge 17% from last week’s peak, has roughly $2.78 billion left from its repurchase plans that it could use to buy back its stock, according to a note posted by Citi analysts. Currently, Citi has a $364 price target on Baidu’s shares, which is 65% upside from its current trading levels.

Many analysts now see a buying opportunity on Chinese tech stocks, noting that the sell-off isn’t fundamentally related to the companies.

“While there is still room for more downside as valuations contract, we are seeing good value in some of the higher quality blue chip tech stocks with strong free cash flows such as Tencent, Baidu, Alibaba and JD.com," Michael Foo, the chief investment officer at HP Wealth Management, said, as cited by Bloomberg earlier this week.

Lately, Vipshop also came under fire from Beijing amid a crackdown on firms using monopoly practices to dominate the markets. The State Administration for Market Regulation has fined Vipshop and Baidu, as well as other big Chinese tech companies.

Topics:Vipshop, Alibaba, Baidu, JD.com, Tencent Music, LightInTheBox.
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