The founder of pet e-commerce company Chewy (NYSE:CHWY) and the current chairman of video-game retailer GameStop (NYSE:GME), Ryan Cohen, has reportedly bought Alibaba (NYSE:BABA) stock. A Chinese e-commerce giant, Alibaba has had multiple problems in recent years, and its shares have tumbled 60% from its all-time high of $300 reached in October 2020.
On the other hand, BABA stock has advanced 67% from its October 2022 low of $58.
Cohen’s Purchase of BABA Stock
Cohen has reportedly bought “hundreds of millions of dollars” of BABA stock and is asking the company to buy back more of its shares going forward, The Wall Street Journal reported, citing unnamed sources. In August 2020, the billionaire investor told Alibaba that BABA stock was meaningfully undervalued and expressed his belief that the e-commerce giant could generate revenue growth and free cash flow gains of at least 10% and almost 20%, respectively, “over the next five years.”
The Investor’s Mixed Record
Chewy has become a successful company with an $18.5 billion market capitalization, although it generates little or no profit. Cohen sold Chewy to PetSmart for $3.3 billion in 2017.
On the other hand, since Cohen was named as GameStop’s incoming chairman in April 2021, GME stock has tumbled over 50%.
And in a series of events that appeared to be very embarrassing (although also very lucrative) for Cohen, his company, RC Ventures, sold all of its Bed Bath and Beyond (NASDAQ:BBBY) stock last August. RC’s move came several days after a Securities and Exchange Commission (SEC) disclosure showed that Cohen had previously purchased 1.7 million bullish, call options on BBBY stock. The news helped to trigger a huge rally in the name. The moves led to accusations that Cohen had carried out a “pump and dump” scheme.
Now BBBY looks to be headed for bankruptcy.
Can BABA Stock Become a Meme Name?
Given Cohen’s checkered record and the hugeness of BABA (its market capitalization is over $310 billion), the chances of Alibaba becoming a high-flying meme stock along the lines of GME or AMC (NYSE:AMC) don’t appear to be high. Also worth considering is that, after many meme stocks, along with Bitcoin (BTC-USD), plunged over the last 18 months or so, many meme stock fans probably don’t have nearly as much capital as they used to.
Still, boosted by China’s reopening and benefiting from some love from Cohen’s remaining fans, BABA stock could head higher in the coming weeks and months. Also likely to help BABA is the apparent reduction of Beijing’s animosity towards the company.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.