Key TakeawaysThe Big Short investor liquidated his complete Alibaba position to establish a substantially larger stake in JD.comAccording to Burry, Alibaba’s price would require a 50% plunge to become attractive againThe Chinese e-commerce giant is issuing HK$80 billion in new shares for AI investments, creating 3.7% shareholder dilutionJD.com’s valuation metrics show 8.3x forward P/E with 10.7% FCF yield compared to Alibaba’s -4.2% FCF yieldDespite the move, Morgan Stanley recently cut JD.com to Underweight with a $28 targetThe legendary investor who profited massively from shorting subprime mortgages ahead of the 2008 collapse has completely exited his position in Alibaba, redirecting those funds toward JD.com.JD.com, Inc., JDThrough a post on X, Burry disclosed that he executed this portfolio shift several months back, converting his Alibaba holdings into an expanded JD.com stake. He stated clearly that returning to Alibaba isn’t in his plans.The catalyst for his decision centers on a concrete development. Alibaba unveiled plans for an HK$80 billion capital raise, approximately $10.2 billion, designated for artificial intelligence infrastructure buildout. For Burry, this signals a fundamental shift toward equity dilution as standard practice.“Issuing shares is now its new paradigm,” Burry stated. He further noted that Alibaba’s stock price would need to collapse approximately 50% from present levels to warrant his renewed interest.How the Metrics Stack UpThe financial comparison reveals stark contrasts. Alibaba currently commands a 25x trailing P/E ratio alongside a -4.2% free cash flow yield. Meanwhile, JD.com sits at 17.9x trailing earnings and just 8.3x forward earnings, generating a robust 10.7% free cash flow yield.Dividend distributions further highlight the divide: JD.com offers a 3.3% yield versus Alibaba’s meager 0.9%. Wall Street analysts project approximately 49.6% potential upside for JD.com relative to estimated fair value, while Alibaba shows 19.9% upside potential.The equity offering from Alibaba involves placing 710 million fresh shares priced at HK$112.70 apiece, representing an 8.4% markdown from the previous trading session. This expansion inflates outstanding shares by roughly 3.7%. Market reaction was swift—Alibaba plummeted nearly 10% following the announcement.Profitability trends present additional concerns. Alibaba’s net earnings contracted from $17.83 billion down to $15.35 billion despite revenue climbing 8%. Return on invested capital has deteriorated sharply to merely 2.6%.JD.com experienced similar earnings pressure, with net income declining from $5.67 billion to $2.81 billion. However, market observers attribute this decrease to strategic investments in emerging sectors like food delivery services rather than fundamental operational weaknesses.Counterarguments and HeadwindsBurry’s repositioning hasn’t achieved universal endorsement. Morgan Stanley recently slashed JD.com’s rating to Underweight, establishing a $28 price objective that falls beneath current trading levels.Barclays research highlights JD.com’s substantial exposure to electronics and household appliances—segments vulnerable to softening as Chinese government stimulus programs for product trade-ins begin phasing out.Regarding Alibaba, the broader analyst community maintains optimism. Consensus price targets suggest approximately 58.5% upside potential, with certain valuation frameworks positioning fair value around $143.11, representing roughly 20% appreciation from current quotations.Burry’s transaction embodies textbook value investing principles. He’s rotating out of a capital-intensive company trading at premium multiples into a cash-generative alternative available at discounted valuations.The post Why Michael Burry Dumped Alibaba (BABA) for JD.com (JD) Stock appeared first on Blockonomi.