Why is Alibaba stock sliding today?

Alibaba's stock experienced a significant decline of nearly 10% on Monday, reaching HK$110.8 following the company's revelation of a massive HK$80 billion equity placement over the weekend. This offering included 710 million new ordinary shares priced at HK$112.70 each, sold to at least six institutional investors outside the United States.

The deal's purpose was primarily to bolster AI infrastructure, encompassing full-stack AI capabilities, marking the largest primary follow-on share offering in Hong Kong-listed company history. The placement price was approximately 8.4% below the prior Thursday closing level, setting a somber tone for the opening bell. Notably, prominent investor Michael Burry had recently unwound his entire Alibaba position, expressing a need for the stock to drop by half before he would consider investing again, primarily due to his reservations about the HK$80 billion capital raise.

Alibaba had already been struggling from the previous week, with mixed quarterly earnings reflecting robust performance in AI and cloud services, yet a significant slowdown in e-commerce operations. The stock was the largest drag on the Hang Seng index, which declined by 2% on Monday.