Tencent Music (TME), Vipshop (VIPS), GSX (GSX) - Caught Up With the Archegos Liquidation - Announce Buybacks to Capitalize on Stock Weakness

Several of the stocks caught up with the Archegos hedge fund liquidation have announced stock buybacks as they look to capitalize on the recent stock weakness.

After the hedge fund defaulted on margin calls last week, shares of some companies Archegos held large swap positions in fell sharply as big banks offered massive blocks of stock for sale on Friday which they held as collateral.

Discovery (NASDAQ: DISCA) crashed almost 46% last week, ViacomCBS (NASDAQ: VIAC) lost over half of its value, while Baidu (NASDAQ: BIDU) dropped nearly 19%.

As Tencent Music Entertainment Group (NYSE: TME) stock fell 33.9% last week, the entertainment giant has used this weakness to announced a buyback program. The Company announced it may repurchase up to $1 billion of its Class A ordinary shares in the form of American depositary shares ("ADSs") in the next 12 months starting from March 29, 2021.

Mr. Tong Tao Sang, Chairman of the Board, said, "The Share Repurchase Program is a strong indication of the Board's confidence in the Company's business outlook and long-term strategy, and we believe it will ultimately benefit TME and create value for its shareholders."

Similarly, Vipshop (NASDAQ: VIPS) and GSX Techedu (NYSE: GSX) also announced they will be buying back their shares after suffering losses of over 40% and 65%, respectively.

VIPS may buyback up to $500 million of its stock in the next 2 years while GSX’s CEO and Chairman Larry Xiangdong Chen intends to use his personal funds to purchase up to $50 million of the Company's shares over the next 12 months.

GSX has already bought back $39.8 million of its shares since it announced a share repurchase program in May last year. Under this plan, GSX may repurchase up to $150 million of its shares, effective until May 6, 2022. In addition, GSX founder, Chairman and CEO, Larry Xiangdong Chen, intends to use his personal funds to purchase up to US$50 million of the Company's shares over the next 12 months.

TME stock is up 2.1% in pre-open Friday, while VIPS and GSX have gained 5.4% and 5.1%, respectively.

VIAC and DISCA, as well as some other companies caught up with the Archegos liquidation, haven’t announced buybacks so far.

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