Jack Ma, Ant Group, Disney, Facebook, China and Covid-19 Vaccines

Jack Ma leads one of the world’s largest potential IPOs, Disney slashes Facebook advertising, China plots 5G retaliation and Oxford publishes encouraging vaccine news.
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Jack Ma
PARIS, FRANCE - MAY 16, 2019 : The chinese businessman and CEO of Alibaba group Jack Ma in congress at VIVA Technology (Vivatech) the world's rendezvous for startup and leaders. By Frederic Legrand - COMEO

July 20, 2020 – Jack Ma leads one of the world’s largest potential IPOs, Disney slashes Facebook advertising, China plots 5G retaliation and Oxford publishes encouraging vaccine news.

Today’s word count: 1,271 words (8 minutes)

Jack Ma’s Ant Group Plans Dual IPOs in Shanghai, Hong Kong, Bypassing New York

Ant Group, owner and operator of the Chinese mobile-payment platform Alipay, is planning its initial public offering with concurrent listings in Hong Kong and Shanghai. Alipay spun off from Alibaba’s e-commerce sites and is now closing in on a billion active users. The Jack Ma-founded startup aims for a $200 billion valuation, which could result in one of the largest IPOs the world has ever seen.

Why It Matters

Ant Group’s valuation seems slightly steep, especially since it was valued at $150 billion back in mid-2018. But Ant is profitable, and several shareholders, including BlackRock, have marked up their investments. A company going public generally sells 10 to 15 percent of its shares, and at $200 billion, Ant Group could join, or even surpass, Alibaba and Saudi Aramco as the world’s largest IPOs.

It’s interesting to consider whether the fundraising upside would be even better if New York were involved. However, as tensions escalate between the U.S. and China, Ant Group is planning to bypass the American stock market in favor of its home. It’s essential to note Ant is “domiciled in mainland China” and would need the blessing of Chinese regulators to list shares on other markets.

It’s a mutually beneficial move for Shanghai’s fledging STAR market. “Virtually all IPOs on China’s fledgling STAR market, which is also known as the Science and Technology Innovation Board, have also surged upon listing,” The Wall Street Journal writes. STAR executive chairman Eric Jing also said Ant Group’s listing would help the exchange’s development and the stock exchange of Hong Kong, by attracting more global investors.

Numbers to Consider

  • 900 Million – Alipay’s active users.
  • $25.6 Billion – The price of Saudi Aramco’s public offering, the world’s largest.
  • $5 Trillion – The size of Hong Kong’s stock exchange.

Read More: (WALL STREET JOURNAL)

Disney Slashed Ad Spending on Facebook Amid Growing Boycott

Amid calls for Facebook to improve its enforcement on policies against hate speech and misinformation, Disney has dramatically cut its advertising spending on the social media platform.

Why It Matters

Disney was the tech giant’s top advertiser through the first six months of 2020 and No. 2 in 2019, according to Pathmatics. While Facebook pulls around $70 billion a year in total advertising revenue from over eight million advertisers, one of its biggest clients jumping ship could add sustained pressure for other companies to join in on the boycott. It’s a tricky situation as many brands prefer not to sever ties with Facebook. To them, it’s an “especially effective marketing vehicle.” However, some have no choice but to cut spending facing pandemic-related financial pressures.

Facebook’s leadership, which includes Carolyn Everson, vice present of its Global Business Group, previously told advertisers Facebook “wouldn’t change its policies based on revenue pressure,” according to The Wall Street Journal. A recent Facebook statement did acknowledge changes need to be made, saying, “We know we have more work to do to develop even more tools, technology and policies to continue this fight.”

Numbers to Consider

  • $210 Million – Disney’s estimated 2020 spending for Disney+ ads on Facebook in 2020.
  • $16 Million – How much Disney-owned Hulu spent on Facebook-owned Instagram ads between April and June. 
  • $239.98 – Facebook’s share price Monday morning.

Read More: (WALL STREET JOURNAL)

China May Retaliate Against Nokia and Ericsson If EU Countries Move to Ban Huawei

In the aftermath of the U.S. and U.K. barring Huawei from their 5G networks, Beijing is preemptively considering retaliation against Nokia and Ericsson if the European Union does the same.

Why It Matters

As tensions escalate between Beijing and the West, companies are getting caught in the crossfire. In what’s considered a worst-case scenario, “China’s Ministry of Commerce is mulling export controls that would prevent Nokia and Ericsson from sending products it makes in China to other countries.” Action like this could “frighten” foreign tech companies and compel them to move manufacturing out of China. Though Nokia and Ericsson have thousands of employees and manufacturing plants in China, both can pivot elsewhere in Asia, Europe or North America, to manage Chinese restrictions.

The conflict underscores just how vital the 5G race is. The technology is expected to be roughly 100 times faster than 4G and “underpin” a whole wave of new tech. China is the global leader in the space right now and is shooting to have nearly 60 times the number of 5G cellular cites compared to the U.S. by year-end. Ericsson recently won contracts to supply China’s three largest state-run wireless carriers with 5G equipment.

The supposed retaliation could be “more bark than bite.” China threatened to create a blacklist of foreign entities after the U.S. banned Huawei and has yet to publish any specific companies or individuals on the list.

Numbers to Consider

  • 600,000 – The number of 5G cellular sites China hopes to have by year-end, according to state-run Xinhua News Agency.
  • 10,000 – The number of 5G sites in the U.S. at the end of 2019, according to Bernstein Research.
  • 16,000 – The number of employees Nokia has in its Greater China Market, while Ericsson has 14,000 in the Northeast Asia region.

Read More: (WALL STREET JOURNAL)

A Quick Look

Oxford University, AstraZeneca Covid-19 Vaccine Front-Runner Shows Promise in Trials

  1. University of Oxford researchers and AstraZeneca shared encouraging news Monday. A 1,077-person study of healthy adults showed the co-produced vaccine generated two kinds of immune responses to defend the body against Covid-19.
  2. The results are promising, but the vaccine is still unproven. Researchers are currently conducting much more extensive trials with thousands of volunteers — a 30,000-person U.S. based trial is set to start in August — to determine the true efficacy of the shot.
  3. The WHO chief scientist described Oxford’s vaccine as the “world’s most advanced candidate,” and the U.S. government agreed to pay AstraZeneca up to $1.2 billion to secure at least 300 million doses. AstraZeneca has committed to making 2 billion doses, half of which could potentially be available by the end of this year.

Read More: (WALL STREET JOURNAL)

Worth Your Time

Abandon Ship: Amid the uncertain sports landscape brought on by the Covid-19 pandemic, the NCAA faces an important question. Is it possible, or even worth it, to play college football in 2020? A canceled college football season could result in a $4 billion loss, with implications reverberating throughout the college sports economy. (CNBC)

Bounce Right Back: Throughout the Covid-19 pandemic, the energy sector has taken a beating. Oil prices plummeted in March as lockdown took hold. But Chevron’s deal to buy Noble Energy for around $5 billion is a welcome sign of life for the space and could signal what the industry will look like once recovery progresses further. (WALL STREET JOURNAL)

Tidbits

General Motors is expanding its electric vehicle offering, with 20 different EVs set to be available by 2023 across nearly all its brands.

eBay is on the verge of collecting an approximately $8 billion paycheck as it is in advanced talks to sell its classified ads business to Adevinta.

Another electric vehicle maker could be rising through the ranks as Chinese electric car marker XPeng Motors secured roughly $500 million in its latest fundraising campaign.

A Couple Cents Content

Depending on how interested you are in Spartan Energy’s acquisition of Fisker:

  • Check out a brief overview. (TIKTOK)
  • Dive deeper on the topic. (YOUTUBE)
  • Evaluate for yourself using Justin Oh’s $SPAQ versus $TSLA excel model (DOWNLOAD)

Watch Justin Oh’s breakdown of Peloton’s stock. (YOUTUBE)

I compiled some information on Oatly’s eye-opening capital raise and the rapidly growing plant-based food market. (POST)

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Thanks for reading!

— Justin Birnbaum

    • Reading from an old TC article in 2018, it says BABA owns, at that time, 33% of Ant Financial (interestingly paid w/ IP rather than capital). I would imagine that if Ant Financial IPOs, that should theoretically be good for BABA, since they own a sizable amount of equity. 

        • If they go public, there will be a new price set for that business. But prior to going public, the market is already assigning value to Ant Financial’s business. It will add value only if the public markets value Ant higher than it is already implying through BABA’s equity value. And if this is the case, is it merely liquidity value or if its sizeable, what does the public market now know (through filings) that it doesn’t now? I’m not an expert on international exchanges, but historically the HK exchange has been perceived as the more independent and west-friendly one to invest in. It at one point was the only way to invest in China. I would probably still lean towards HK but, obviously, they have some unrest there too.

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