Hey everyone! Welcome back to the channel that focuses on all of the big IPOs! Today
I have some updates on Airbnb and Ant Group that I wanted to share with you. Plus I needed,
really needed a break from all of the election coverage, so doing a new video outside away
from the TV and computer seemed liked a good idea. And with some nice weather, I said to
myself, let’s hang out on the deck, get some sun and talk some IPO news. As always,
I want to start off by thanking the community for checking in again with me. And for everyone
else that’s new to the channel, my name is Kevin and I want to welcome you here for
the first time. We spend a lot of time talking about IPOs here, so if this is something you’re
interested in, we’d love to have you join the community, it’s super easy, you just
got press that little red subscribe button. So as I mentioned earlier in the week, we
didn’t have a single US company on the IPO calendar because of the election, so I ended
up doing something different by making a video on the only sector that was up in the S&P
in October and what that might’ve been telling us; that video had more of an analytical perspective
instead of me just sharing news, which I really enjoyed making, so I hope you checked it out,
but if you missed it, I’ll link it for you. Anyways, I was really clear in the beginning
of that video when I said there was no US company having an IPO this week, because as
we know, and I talked about it last week, we did expect the China-based Ant Group to
have their record setting IPO this week. Well….that didn’t happen. It was initially set to happen
on the 5th, but it ended up being postponed. And I want to quickly give you an update as
to why it got halted and when it could be back on.
But first, for those of you that need a quick introduction and update to Ant Group, it is
the financial technology company that owns China’s largest digital payment platform,
Alipay, which has over 700 million active users and 80 million merchants. To give you
an idea of how large the platform is, the company reports that Alipay had $17 trillion
dollars in transactions for the 12 months ended June 2020. Ant Group itself is affiliated
with Jack Ma’s Chinese e-commerce group, Alibaba, who will maintain about a 30% ownership
stake in the company once it goes public. As for the IPO, Ant Group was set to raise
around 34 billion dollars with its shares anticipated to be priced at $10.30 in US dollars.
However due to tensions between the US and China, particularly with the US administration
threatening restrictions on Chinese companies, Ant made the decision to list on exchanges
in Shanghai and Hong Kong instead of in the US. We talked about this last week about how
this makes it a lot harder for US investors to buy shares, so I had shared some direct
and indirect options to invest in the IPO; I’m not going to repeat that again here,
but if you missed it, I’ll link it for you in the description.
So that gets us to this week. Heading into the week, there had been a lot of international
demand in the IPO, so pricing was expected to be above that $10.30 that I had just mentioned.
But all that momentum came to a halt when the Shanghai Stock Exchange said in statement
early this week that it had postponed the Ant Group IPO because of major issues that
might cause the company to not to meet the listing conditions or disclosure requirements.
This news came out after the Chinese central bank and other Chinese government officials
called in Ma and Ant Group executives for talks on Monday.
That decision in Shanghai lead to the IPO listing in Hong Kong to also be pulled. As
of now, we don’t know when the IPO will get back on track, but there are some indications
as to how long it could take, which I’ll get to in a minute. One immediate result of
the postponed IPO was that Alibaba shares dropped by 8% on Tuesday. And I’m sure that
was painful to anyone who recently bought shares in Alibaba as a way to get into Ant
Group since, unlike Ant, Alibaba is listed and traded on a US exchange.
The concern going forward is that Ant Group may be facing more regulation in China than
was initially anticipated. Ironically, or maybe not so ironically, The Shanghai Stock
Exchange's announcement came about a week after Jack Ma publicly compared the nation’s
banks to pawnshops and also criticized Chinese regulators for stifling innovation by being
too aversive to risk. That public criticism seemed to result in the regulatory interviews
that came on Monday. And all of this seems to add some bite to
the Chinese Communist Party’s new guidelines, published in September, that emphasized the
need for they called politically sensible people in the private sector to firmly listen
to the party and follow the party. This action by the stock exchange makes it clear that
the guidelines are more than just words; that they will be enforced and that private companies
will be more closely watched over. The big issue, and what could cause concern
for potential investors in Ant Group, is to determine if China is trying to tilt the balance
of power back to state-owned banks, or if it’s that regulators are more concerned
about Ant's lending practices; either way, this type of regulation can impact how potential
investors evaluate the company, leading to a potentially lower valuation due to the regulatory
risk. And this potential impact was only reinforced when China's state-run media said on Wednesday
that a tougher regulatory stance should be seen as a sign that authorities want, and
intend to keep the country's largest tech companies in check.
So right now, the Ant Group IPO is on hold and there is no confirmed date as to when
it will move forward. Some indications are that it could take up to at least 6 months
before the IPO could be back on. So we’ll just have to keep an eye on what happens.
As I hear updates, I’ll pass them on, so definitely turn on that notification bell
so you don’t miss any news that I have to share on its IPO.
Now before we get to the latest news on Airbnb, I do want to ask you to please remember to
press that Like button if you’re enjoying this video, it really helps the channel grow,
as well as helps me know what companies you’re most interested in me covering. And any help
you can give me on growing the channel is greatly appreciated by me. And also, when
you clicked on this video, were you more interested in hearing about Airbnb or Ant Group?….let
me know in the comments.
So onto Airbnb…the company that really needs no introduction with its big-time brand-name
recognition and market leadership that so many of us have been waiting very patiently
for the company to finally make their IPO official. Last week, I predicted they were
on course to have their IPO in December, and now today, we have exclusive reporting from
Reuters that says that will indeed happen. So for me, that just confirmed what I was
expecting. But what was most exciting to me in the Reuters article is that it looks like
we will finally get to see the company’s filing, and that will happen sometime next
week. Yes, finally…we finally get to see their IPO filing. I figured it would come
out soon after the election, and this news confirms that. And obviously, once I get to
look it over, I’ll post a video that gives you the most important details within the
filing itself. Up until this point, the only thing we knew
regarding an Airbnb IPO filing was that the company had only filed a confidential draft
registration statement on August 19th. As most of you know, we had expected the Airbnb
IPO to happen much earlier in the year, but then of course the pandemic put a halt to
that, as their business plummeted and their IPO plans were put on hold as concerns about
valuation rightfully took center stage. So much so that we learned from an interview
with Pershing Square’s Bill Ackman on Bloomberg TV that he had preliminary discussions with
Airbnb to take the company public through the SPAC route. At the time he said that while
AirBnb hadn’t ruled out going public with a SPAC, he felt the company would prefer to
go public through a traditional IPO. But more recently, like last week recently, we heard
that the company was planning to list on the Nasdaq, also cementing the likelihood of a
sooner than later IPO. So while the indications were there for Airbnb having a traditional
IPO, if their filing does come out to the public next week as is being reported, this
obviously will confirm and predict the actual IPO to happen in December, most likely in
the first half of the month. As always, when I have definitive dates for the IPO and when
trading will begin, I will let you guys know, again, another reason to have your notification
bell for the channel turned on. As you guys have heard me say before, I’m really looking
forward to seeing their filing and being able to examine the financials and see how well
they have actually rebounded since the beginning of the pandemic, and there’s a lot of evidence
that they have come back pretty strong, but we’ll see. One piece of evidence for a rebound
in their business was that Airbnb said in July that customers had booked more than one
million nights in a single day for the first time since March 3rd. The other thing that
seems to have helped the company in its rebound is a perceived trend of how people are looking
to travel to areas outside of the big urban and tourist areas, which also includes them
being away from the big hotels where they could be exposed to hundreds of more people
than in an Airbnb rental. Obviously with a resurgence of the virus heading into the winter,
rental trends will continue to be watched and examined closely by the company and potential
investors. As we get closer to Airbnb’s IPO, we’ve
already talked about some really important information in another video on how the company
was valued as recently as September 30th. For a little refresher, in that video, which,
again, will be linked in the description, I had shared how the value of Airbnb shares
had increased 10.4% from the end of the second quarter and that each share was valued at
$69.76 at the end of September. I had also mentioned reporting from Bloomberg on how
Airbnb’s board of directors had recently approved a 2-for-1 split of the company’s
currently private shares which meant that the price of those private shares would effectively
be $34.88 as of September 30th when you consider the stock split. To me, this was important
for us to know because it gave me an idea what the share price was valued at on the
private market, and with that knowledge I felt like it can help us get an idea what
it might be worth, or at least what we might be willing to pay, once it hits the public
market. The guess right now is that Airbnb is looking to raise around $3 billion, and
that it could achieve a valuation of more than $30 billion in the IPO. With so much
interest you guys have expressed in Airbnb in other videos I’ve done and in the comments,
I can tell you that I’ll have a lot of information and videos that I’ll share with you as the
company moves forward with their IPO. So you there you go on Airbnb. Needless to
say, we’ll have a lot more on the company’s IPO on the channel. And remember to let me
know in the comments if you were more interested in hearing about Airbnb or Ant Group when
you decided to click on the video. Next week, we’ll get back to our traditional IPO This
Week episode, and then as soon as I have a chance to see Airbnb’s filing, I’ll share
what’s in it with you so stay tuned. As you guys might be able to tell, the sun
is getting lower; I really don’t like how the days are getting shorter this time of
you. And once it’s dark, I’m going to have to go check in on the election results.
I know, I don’t have to, but I will. But anyway, I hope you enjoyed the video, and
if you did, please remember to hit that like button and share with your friends and on
any of your social media sites and forums you’re on—it’s just so much more important
for helping grow the channel than I ever knew. And, again, if you’re new to the channel
or just an occasional visitor and you liked what we did here, we’d love to have you
join the community…remember it doesn’t cost a thing to subscribe. Until next time,
thank you again for watching and have a great day!