BABA - Alibaba Group Holding Limited
| Previous close | 166.07 |
| Open | 170.77 |
| Bid | 173.50 x 800 |
| Ask | 173.79 x 800 |
| Day's range | 169.57 - 174.88 |
| 52-week range | 129.77 - 195.72 |
| Volume | 19,369,497 |
| Avg. volume | 15,298,443 |
| Market cap | 450.261B |
| Beta (3Y monthly) | 1.89 |
| PE ratio (TTM) | 49.45 |
| EPS (TTM) | 3.50 |
| Earnings date | 31 Oct 2019 - 4 Nov 2019 |
| Forward dividend & yield | N/A (N/A) |
| Ex-dividend date | N/A |
| 1y target est | 223.85 |
- Market Realist
D. E. Shaw & Company: Top Holdings and Fears
David Elliot Shaw or D.E. Shaw is a prominent billionaire hedge fund manager and founder of the firm D. E. Shaw & Company.
- Market Realist
Alibaba, Trade Desk, JD, Roku Lead Tech Gains Today
Shares of tech companies Alibaba, JD.com, the Trade Desk, and Roku are up today. The broader indexes have also opened higher on trade talk optimism.
- Zacks
salesforce to Fuel Esprit's Digital Transformation Journey
salesforce's (CRM) cloud solutions will help Esprit to bring its ecommerce and marketing on a single platform. Moreover, its Success Cloud advisory services will accelerate Esprit's transformation.
- Bloomberg
Tencent Gets ‘Wakeup Call’ From China’s Assertions of Patriotism
(Bloomberg) -- Tencent Holdings Ltd. can’t get a break.The National Basketball Association, Activision Blizzard Inc. and now one of its most important portfolio companies, Fortnite proprietor Epic Games Inc., have all sparked political controversy at a time of increasingly assertive Chinese nationalism online.A tweet by an NBA executive expressing support for Hong Kong protesters drew the ire of Beijing, throwing into question the billions Tencent has invested in the U.S. sports league. Then Blizzard, partly owned by Tencent, banned a gamer for endorsing Hong Kong’s pro-democracy movement, triggering a boycott of the company’s games for its apparent kowtowing to China. Most recently, Epic Chief Executive Officer Tim Sweeney tweeted his disagreement with the Blizzard action, eliciting calls for a boycott of its Fortnite game among Chinese players incensed by the perceived slight.At stake for Tencent are billions of dollars in ad and subscription revenue, along with its entire strategy of becoming a go-to destination for NBA broadcasts. Tencent had almost half a billion basketball aficionados tune in last season. That audience is now in jeopardy after Tencent halted game broadcasts in the wake of the Hong Kong controversy.“It’s a big wakeup call for Chinese tech companies,” said Mark Tanner, founder of Shanghai-based research and marketing company China Skinny.Tencent had just inked a $1.5 billion, five-year deal to stream NBA games online in China. Its suspension of broadcasts followed a similar move by state-backed CCTV.Tencent uses the online streams to sell ads, and the gargantuan scale of the audience drives its marketing business, which is expected to be a key driver of Tencent growth going forward. To spruce up its investment, Tencent has been developing memorabilia, entertainment shows and video games based on the NBA.“Advertising of Tencent sports will likely take a hit. NBA is the star of Tencent sports, so it could cause a contract of Tencent’s advertising growth further,” said Michael Norris, a Shanghai-based research and strategy analyst at consultancy AgencyChina.NBA China Woes Threaten Billions of Dollars, Decades’ WorkA single tweet from the Houston Rockets’ general manager supporting Hong Kong’s protesters was enough to spark a chain reaction, including an abridged history lesson by Alibaba Group Holding Ltd. Vice-Chairman Joe Tsai, majority owner of the Brooklyn Nets. Alibaba has also yanked Rockets merchandise from its online stores, causing harm to both the NBA and Alibaba’s bottom line.After initially apologizing, the league went on to express its support for staff’s freedom of political expression via a statement by Commissioner Adam Silver. That sparked another round of fury in China, threatening to prolong the clash and the blackout.The Chinese company’s shares have held up well so far, despite warnings from analysts including Citigroup’s Alicia Yap that the streaming freeze will hurt Tencent’s media ad revenue -- particularly if it extends into the regular season.But there’s more trouble ahead: Tencent’s gaming portfolio is spurring controversy too. For years, the WeChat operator took a hands-off approach with the startups and studios across its empire, reaping the benefits of importing Western content and technology for a vast Chinese market. Now the two are increasingly at odds, and Tencent is beginning to realize the downside to its passive approach.Blizzard’s stern reprimand of the pro-Hong Kong player was popular in China, but drew outrage from the U.S. to South Korea. Online, gamers called for a boycott of the company and proudly posted their cancellations.Then Epic CEO Sweeney jumped into the crossfire, explicitly giving Fortnite players the green light to discuss politics. The game maker is 40% owned by Tencent, but Sweeney is the controlling shareholder.His statement earned accolades in the U.S., but was shunned in China. “Tencent why are you not holding your dog on a leash? They are biting you in your face,” one person wrote on Weibo. Tencent spokeswoman Jane Yip didn’t respond to a request for comment.With its investments in Epic and Blizzard, Tencent has its brand on the line -- but little control.“Never have we seen this policing of China companies being extended to subsidiaries,” said Norris. “And that’s what Tencent is having to grapple with.”Over the years, Tencent and Alibaba have worked hard to remain on the good side of Beijing, with Tencent recently launching a patriotic game called Homeland Dream in time for the People’s Republic of China’s 70th anniversary celebrations. Both have also been called out by name in Senator Marco Rubio’s letter to President Trump as examples of how Chinese companies are used as tools to help “coerce American companies and American citizens to bend to Beijing’s will.”With its growing exposure to international markets and regulation, Tencent finds itself in the middle of a maelstrom of political, economic and cultural grievances. Eight Chinese companies -- two of which are backed by Alibaba -- were this week placed on a U.S. blacklist for allegedly being involved in human rights abuses of a Muslim minority in China’s Xinjiang region. That follows the Washington government’s discussion about whether to restrict pension fund investments into China.Tencent and the rest of China’s technology companies now have to consider risks they’ve never faced before.“They’re realizing they may not have as many friends as they thought they had across the Pacific,” said Tanner of China Skinny.(Updates with shares from the 11th paragraph)To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.netTo contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Vlad Savov, Peter ElstromFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Zacks
Alibaba (BABA) Gains But Lags Market: What You Should Know
Alibaba (BABA) closed at $166.05 in the latest trading session, marking a +0.52% move from the prior day.
- Yahoo Finance
Nasdaq CEO: Chinese IPOs are 'in our economic interest'
Adena Friedman, the CEO of Nasdaq, said it is best for the U.S. to keep the door open to Chinese companies.
- Market Realist
Delisting Woes: Make Trade, Not War
If Shakespeare were an investor in today’s market, maybe he'd have said, "To delist, or not to delist, that is the question," instead.
- Zacks
Stocks Jump on Trump Trade Tweet, Q3 Earnings and Buy Marijuana Stocks - Free Lunch
U.S.-China trade war updates, including President Trump's tweet that helped U.S. stocks climb Thursday. A look at the ongoing fight between the NBA and China, some Q3 earnings results next week, and why marijuana stock Cronos looks like a buy - Free Lunch
- Zacks
Amazon Launches Online Store to Expand in Southeast Asia
Amazon (AMZN) launches a local store and marketplace in Singapore in a bid to expand presence in Southeast Asia.
- Bloomberg
Amazon, Walmart Will Help Save India’s Banks
(Bloomberg Opinion) -- A common refrain you hear in India is, “There’s no credit in the market.” The despondence cuts across industries as diverse as real estate, autos and road construction. An 88% slump in the flow of funds to the commercial sector between April and September shows that the producers’ unease is justified. However, one credit tap is starting to gurgle, giving some cause for optimism. Pocket-sized loans are feeding online consumption, with demand coming from smaller cities and towns. The amounts are still tiny, but as digital spending grows, financing it has the power to turn the page on Indian lenders’ underwriting of soured corporate loans: the source of a $200 billion sigh of collective agony.Amazon.com Inc. and Walmart Inc.’s Flipkart Online Services Pvt claimed record sales during the recently concluded six-day online shopping bonanza that marks the start of the Indian festival season. Although nowhere close to Alibaba Group Holding Ltd.’s $31 billion Singles’ Day promotion in China, the Indian version of Black Friday has grown fivefold to $3 billion in four years, according to a review of this year’s sales by RedSeer, a consulting firm. Add the spending between now and Diwali, the Hindu festival of lights, and Forrester Research reckons the total for a month of online purchases may fall just shy of $5 billion. Although the 30% growth this year was slower than in the previous three, it’s a strong outcome in a weak economy. Both of India’s leading e-commerce marketplaces cited small towns – and credit – for their success. Flipkart says Tier 3 cities ordered 100% more goods this year. The share of transactions using credit options grew by 70%, with a majority of these people living outside of big cities. Amazon revealed that three out of four customers who availed themselves of financing came from Tier 2 and 3 cities; significantly, every second buyer who used credit did so for the first time.All this is hardly unique to India. China’s e-commerce boom saw an explosion of microloans, with millennials buying hamburgers on credit and the buy-now-pay-later habit picking up in Indonesia. What makes India interesting is the possibility that soon even physical retail will embrace digital in-store credit – minus plastic.A mobile-payment app with pay-later options at physical stores will be an important innovation. For all its expansion, e-commerce will account for only 7% of India’s $1.2 trillion retail sales by 2021, according to Deloitte. Credit cards won’t go beyond big cities and organized retail. It’s not worth any bank’s while to make card acceptance universal because the revenue to a bank from signing up a mom-and-pop shop – the merchant who handles purchases at the bottom of the income pyramid – is a meager $4 a month.That’s why Flipkart’s “cardless” credit deserves attention. Customers are validated for a $1,400 limit via a simple video upload; the actual financing comes not from Flipkart but from banks and financiers like Bajaj Finserv Ltd. This is the model that Mukesh Ambani, India’s richest man, might use to connect India’s 30 million small retailers with consumers. Amazon’s claim that its Great Indian Festival saw orders from 99.4% of the country’s postal codes owes that reach to Ambani’s aggressive entry into telecoms three years ago. The 4G network of Reliance Jio Infocomm Ltd. has caused data prices to crash and usage to explode.But Ambani won’t let the American duo of Amazon and Walmart be the biggest beneficiaries of his disruption. If Jio succeeds in taking its knowledge of 340 million Indians who use its mobile service to neighborhood stores, where most people still shop, banks and shadow banks will rush in with credit. From Citigroup Inc. to State Bank of India, HDFC Bank Ltd. to Singapore’s DBS Group Holdings Ltd., everyone will want this sizable new line of revenue at the intersection of consumer and corporate banking. Writing in the Financial Times, Viral Acharya, a former deputy governor at the Indian central bank, argues that finance in India must learn from shampoo makers such as Unilever and Procter & Gamble Co., who boosted sales by offering families affordable quantities in small sachets rather than in more expensive full-size bottles.To similarly make bite-sized finance sustainable, account aggregators are coming. They’ll digitally record a consumer’s transactions with various institutions and, with consent, share data with a lender. Given that 52% of Indian workers are self-employed, and only 23% earn a regular wage, to be able to accurately assess a borrower’s irregular cash flows will give lenders confidence to extend credit.So large is the overhang of bad corporate debt that to suggest a better model of banking will emerge invites skepticism. Yet below the surface of corporate bankruptcies and failing financial institutions, technology is enabling important change. Maybe not tomorrow, but credit will go where it is due. To contact the author of this story: Andy Mukherjee at amukherjee@bloomberg.netTo contact the editor responsible for this story: Patrick McDowell at pmcdowell10@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Zacks
Stock Market News For Oct 9, 2019
Benchmarks closed in the negative territory on Tuesday as U.S. blacklisted 28 Chinese companies and imposed visa restrictions on Chinese officials, dampening hopes on trade negotiations.
- Zacks
Has Alibaba Group Holding (BABA) Outpaced Other Retail-Wholesale Stocks This Year?
Is (BABA) Outperforming Other Retail-Wholesale Stocks This Year?
- Bloomberg
Crypto Giant Binance Starts Yuan Trading in China Homecoming
(Bloomberg) -- Binance Holdings Ltd. was quick to leave China after regulators started to crack down on digital currencies. Now, the exchange behemoth has returned to its lucrative home market to host over-the-counter yuan trade.The startup launched a peer-to-peer trading platform that lets users trade Bitcoin, Ether and Tether against the Chinese currency. Founder and Chief Executive Officer Zhao Changpeng said in a tweet the P2P service will start with China, then expand into other regions. The platform marks a homecoming for a startup that quit the country two years ago, when regulators ordered local crypto-exchanges to stop targeting domestic clients for fear of stoking financial speculation. Binance blocked Chinese Internet Protocol addresses, moved its offices to places like Japan and Taiwan, and incorporated on the Mediterranean island of Malta.Yet crypto-trading has flourished in China through OTC platforms, which host direct broker-dealer transactions versus trades on a centralized exchange. OTC platforms run by Chinese operators Huobi and OKCoin are now among the most popular vehicles for local traders to exchange yuan for digital coins. Wallet apps operated by Alibaba Group Holding Ltd. and Tencent Holdings Ltd. are used in OTC trading though the central bank has warned against it.Binance’s OTC service also represents its latest foray into the world of fiat money. Founded two years ago, the startup gained momentum by handling crypto only, which allowed it to grow rapidly without dealing with banks and regulators. But more recently, Binance has set up regulatory-compliant exchanges in jurisdictions like Singapore to appeal to a larger user base. In August, it announced a so-called stable coin to rival Facebook Inc.’s controversial Libra currency. Both are intended to be used for everyday transactions across the globe.In September, Binance made its first strategic investment in China, joining a financing round that valued crypto-data site Mars Finance at about $200 million.To contact the reporter on this story: Zheping Huang in Hong Kong at zhuang245@bloomberg.netTo contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Joanna OssingerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters
Alibaba to stop sales of e-cigarette components in United States
The move follows announcements by Kroger Co and Walgreens Boots Alliance Inc this week that they would stop selling e-cigarettes at their stores, in line with a similar decision by Walmart. Alibaba said it already had a long-standing policy in place to not sell complete e-cigarette products in the United States.
- Zacks
Chinese Companies Cut Ties with Houston Rockets: Can This Have Implications on Nike?
The feud between China and the NBA has started to heat up after the NBA commissioner announced on Tuesday that he would not be regulating what his general managers or players say.
- Bloomberg
Amazon and Facebook Face Thai Tax Crackdown in Latest Backlash
(Bloomberg) -- Thailand is considering forcing online giants such as Amazon.com Inc. and Facebook Inc. to collect value-added tax on e-commerce sales, echoing an Indonesian clampdown on transactions that skirt the levy.Cross-border purchases by Thais routed through global online marketplaces, as well as booming domestic sales in the so-called social-commerce sector, should incur the tax. But overseas vendors aren’t always aware of such obligations, and many Thais selling informally via social media avoid them.“Our laws just can’t catch up with market trends,” Pinsai Suraswadi, principal adviser in Thailand’s Revenue Department, said in an interview Tuesday in Bangkok. “Current rules put the responsibility on the customer to come to us to pay the value-added tax. But in reality, it’s difficult to collect.”Governments from Indonesia to Mexico say huge amounts of online sales and profits aren’t taxed properly, and they’re intensifying efforts to enforce their claims. Legislation to plug the gap may reach the Thai parliament by the end of the year, Pinsai said, adding that officials are also looking at taxing the Thailand-derived earnings of internet platforms.Read more: Amazon, Google Face Tax Test as Indonesia Reins In E-CommerceThailand could put the onus on internet platforms to ensure the 7% consumption tax is collected and sent to the government, Pinsai said. A separate digital services levy could be imposed on the Thailand-derived earnings of such firms, he said. The rate hasn’t been decided yet.Facebook declined to comment on Thailand’s efforts to tighten its rules. Amazon didn’t respond to a request for comment.Levies on goods and services, such as the value-added charge, account for more than half of Thai tax revenue, an Organization for Economic Cooperation and Development report shows.The country collected 806 billion baht ($27 billion) of value-added tax in 2018, according to official data. Pinsai said applying the charge to e-commerce will generate additional revenues exceeding “many billions of baht,” but declined to give an exact figure.The Thai e-commerce sector may be worth $18 billion by 2025 and its wider Internet economy could more than triple to $50 billion from the current $16 billion, research by Google, Temasek Holdings Pte and Bain & Co. shows.However, these figures don’t cover social commerce because of a lack of reliable data. Social commerce refers to burgeoning purchases of goods and services through Line, Facebook and Instagram, where buyers may haggle over price and often skirt value-added tax, as the sector is relatively new and part of the gray economy.Officials should think carefully about whether taxes will stunt the e-commerce sector, said Somprawin Manprasert, chief economist at the research division at Bank of Ayudhya in Bangkok.‘Foregone Opportunities’“If the government is only looking to add more revenue by imposing this tax without contemplating foregone opportunities, it won’t be good in the long-term,” he said. “If they used that revenue to build a better digital ecosystem, operators, tech companies and investors would be able to accept that.”With an economic slowdown is squeezing tax collection, Pinsai said Thailand’s revenue department may have to cut its 2.1-trillion-baht target for this fiscal year.Pinsai said the administration is also weighing whether to impose customs duties on low-value cross-border purchases by Thais, which are growing fast. These sub-1,500 baht ($49) imports -- for example, orders placed with Chinese sellers on Alibaba Group Holding Ltd.’s AliExpress platform -- are below the current threshold for customs levies.Adam Najberg, a spokesman for Alibaba, didn’t immediately respond to requests for comment.“There’s exponential growth in the revenue of e-commerce in comparison to the flat growth of tax revenue collection,” Pinsai said. “It’s a very big gap.”\--With assistance from Lulu Yilun Chen.To contact the reporters on this story: Natnicha Chuwiruch in Bangkok at nchuwiruch@bloomberg.net;Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.netTo contact the editors responsible for this story: Sunil Jagtiani at sjagtiani@bloomberg.net, Michael S. ArnoldFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Market Realist
JD.com, BABA, and Baidu Fall Due to Blacklisting Fears
Among Chinese tech giants, JD.com, Alibaba (BABA), and Baidu (BIDU) shares are trading lower in early market trading today.
- Simply Wall St.
Could Alibaba Group Holding Limited's (NYSE:BABA) Investor Composition Influence The Stock Price?
The big shareholder groups in Alibaba Group Holding Limited (NYSE:BABA) have power over the company. Institutions...
- Bloomberg
U.S. Blacklisting Threatens to Derail $1 Billion Chinese Tech IPO
(Bloomberg) -- Donald Trump’s latest salvo against China threatens to derail a $1 billion coming-out party for a prominent startup backed by Alibaba Group Holding Ltd., while curtailing the country’s broader ambitions of leading artificial intelligence in the coming decade.The U.S. placed eight Chinese technology giants on a U.S. blacklist on Monday, accusing them of being implicated in human rights violations against Muslim minorities in the country’s far-western region of Xinjiang. Among those singled out for sweeping American export restrictions were SenseTime Group Ltd., the world’s largest AI startup, and Megvii Technology Ltd. -- two giant enterprises Beijing is counting on to spearhead advances into a revolutionary technology, aided by billions of dollars in foreign backing.The White House’s actions -- announced days before sensitive trade negotiations resume in Washington -- cast a pall over not just Megvii’s capital-raising effort but the burgeoning Chinese sector. Leading players like SenseTime and Megvii, already having trouble securing financing during an economic downturn, had considered international forays to sustain a sizzling pace of growth. The Commerce Department’s action threatens to derail that effort while spooking the business, supply and research partners needed over the longer term. Nvidia Corp., for one, is a key supplier to both AI firms.“This will make people think twice about working with these companies even if there are no legal reasons preventing them from doing so,” said Isaac Stone Fish, a senior fellow with the Asia Society’s Center on U.S.-China Relations. “Reputational costs will be greater than financial costs.”Read more: U.S. Blacklists China’s Hikvision, 7 More Over Human RightsMonday’s move marks another escalation in a U.S. effort to contain China’s technological ascendancy, a campaign that began by slapping curbs on Huawei Technologies Co. and now encompasses some of the country’s most promising startups. Apart from SenseTime and Megvii, the Trump administration placed six other Chinese technology giants on its so-called Entity List. That bars them from doing business with American companies without a U.S. government license.SenseTime and Megvii are trying to reduce their reliance on American software and circuitry by developing their own chips. Monday’s blacklisting could further decouple the two Chinese companies from the U.S. in terms of tech and funding. Megvii said in a statement that it “strongly objects” to the U.S. blacklisting and that the company complies with all regulations in the markets in which it operates.“We believe our inclusion on the list reflects a misunderstanding of our company and our technology, and we will be engaging with the U.S. government on this basis,” the company said.“We are deeply disappointed with this decision,” SenseTime said in a statement, emphasizing it complies with all relevant laws. “We have been actively developing our AI code of ethics to ensure our technologies are used in a responsible way.”U.S. Just Started Targeting China’s Tech Future: Tim CulpanA spokesman for China’s foreign ministry said on Tuesday the U.S. is interfering in its internal affairs and harming the country’s interests. Asked if China would retaliate over the blacklist, the spokesman told reporters to “stay tuned.”Chinese AI has raised hackles in Washington like no other segment of the country’s vast corporate machine, in part because of the welter of headlines daily proclaiming how it may surpass the U.S. Broadly defined as anything from autonomous driving and robot waiters to facial recognition systems, names like Megvii and SenseTime are joined by established players including Huawei, Tencent Holdings Ltd. and Didi Chuxing in an effort that’s intended to seal China’s place at the nexus of the modern global economy.Read more: China’s Hottest Startups Struggle for Cash Amid Trade WarMegvii’s IPO was supposed to have been the Chinese industry’s unofficial debut on the global stage. Already mothballed because of rising violence in Hong Kong, that offering now looks in question. While the startup warned in its prospectus about the unforeseen circumstances of conflict between Washington and Beijing, it never publicly addressed the prospect of getting cut off from American technology or markets.It’s unclear how foreign investors may respond to Monday’s decision. Megvii counts Qiming Venture Partners and Chinese AI guru Lee Kai-Fu’s Sinovation Ventures as backers. SenseTime won funding from global powerhouses from Fidelity International and Silver Lake to Tiger Global and SoftBank Group Corp., en route to a valuation of $7.5 billion.Both have enjoyed rip-roaring growth in recent years. SenseTime has expanded from facial recognition technology to financial security, robot deliveries and driverless cars. The five-year-old startup now has 3,000 people and is hiring about 100 staff every month. Revenue is still growing at triple-digit percentages, though it remains cash-flow-negative because of the need to invest in new areas such as AI chipmaking. While it still relies on Nvidia chips, it’s also developing in-house alternatives and investing in startups, SenseTime Chief Executive Officer Xu Li said in September.Also on Commerce’s list were lesser-known Xiamen Meiya Pico Information Co. and Yixin Science and Technology, major resources for China’s police force. Meiya, whose products are used for data gathering and analysis, is controlled by China’s state capital management body. Yixin also provides big-data analysis for the Chinese authorities, according to its website.Read more: CEO of Biggest AI Startup Says Valuation Passed $7.5 BillionHefei, Anhui-based iFlytek Co., another company on the list, specializes in natural language processing but also provides AI-based video and security services. Its shares slid Tuesday but the company dismissed any major impact from the blacklisting because its core technologies are homegrown.“We have been preparing for this kind of situation and have contingency plans to keep providing high-quality products and services to our customers,” it said in a statement.(Updates with company statements from sixth paragraph)\--With assistance from Candy Cheng.To contact the reporters on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net;Gao Yuan in Beijing at ygao199@bloomberg.netTo contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Edwin Chan, Vlad SavovFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
SoftBank’s Damage From Uber, WeWork Could Exceed $5 Billion
(Bloomberg) -- Masayoshi Son’s startups have had a rough few months, from a botched initial public offering by WeWork to a sharp decline in shares of Uber Technologies Inc. Now analysts are beginning to calculate that the damage for Son’s SoftBank Group Corp. will likely reach into the billions of dollars.Mitsubishi UFJ Morgan Stanley Securities Co. cut its profit estimate for SoftBank’s Vision Fund, its main investment vehicle, by 580 billion yen ($5.4 billion) to an operating loss of 367.6 billion yen for the September quarter, citing declines in the stock prices of Uber and Slack Technologies Inc. and the withdrawn WeWork IPO. Sanford C. Bernstein & Co. estimates that Vision Fund’s writedown alone could be as much as $5.93 billion, with another $1.24 billion drop for the portion of WeWork owned by SoftBank Group.Son is going through a particularly rocky stretch after repositioning SoftBank from a telecom operator into an investment conglomerate, with stakes in scores of startups around the world. He built a personal fortune of about $14 billion with strategic bets on companies such as China e-commerce giant Alibaba Group Holding Ltd. But the recent troubles have weighed on SoftBank’s shares, pushing them down about 30% from their peak earlier this year as investors grow skittish about startup valuations.“Profits in the [SoftBank Vision Fund] segment may still see considerable volatility ahead,” Mitsubishi UFJ analyst Hideaki Tanaka wrote.Uber’s share price drop was the main culprit for Vision Fund’s poor performance in the second quarter, Tanaka wrote. He also reduced SoftBank Group’s fiscal year operating profit to 1.01 trillion yen, from 1.59 trillion yen.SoftBank may book a $3.54 billion drop in the value of its Uber stake, a $750 million decline for Guardant Health Inc. and take a $350 million hit for Slack, according to Chris Lane, an analyst at Sanford C. Bernstein. Lane said the combined writedown for WeWork may be as much as $2.82 billion, assuming a slide in the company’s valuation to $15 billion from $24 billion, but remains uncertain. He said his estimates represent a worst-case scenario and may be offset by gains from other unlisted companies.In an interview with the Nikkei Business magazine, Son said he is unhappy with how far short his accomplishments to date have fallen of his goals.“The results still have a long way to go and that makes me embarrassed and impatient,” Son said. “I used to envy the scale of the markets in the U.S. and China, but now you see red-hot growth companies coming out of small markets like in Southeast Asia. There is just no excuse for entrepreneurs in Japan, myself included.”“It only just began and I feel there is tremendous potential there,” Son told Nikkei Business. The strategy is to invest in companies that share his vision of a world being reshaped by artificial intelligence, he said.SoftBank Gives ‘Very Public Lesson’ to Founders in WeWork OusterWeWork and Uber may be losing money now, but they will be substantially profitable in 10 years’ time, Son said in the interview. At a private retreat for portfolio companies late last month he had a different message: become profitable soon. At the gathering, held at the five-star Langham resort in Pasadena, California, Son also stressed the importance of good governance. Just days later, SoftBank led the ouster of WeWork’s controversial co-founder Adam Neumann.(Updates with Sanford C. Bernstein’s projections from second paragraph)To contact the reporters on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net;Takahiko Hyuga in Tokyo at thyuga@bloomberg.netTo contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Edwin ChanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
U.S. Blacklists Eight Chinese Tech Companies on Rights Violations
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. The Trump administration placed eight Chinese technology giants on a U.S. blacklist on Monday, accusing them of being implicated in human rights violations against Muslim minorities in the country’s far-western region of Xinjiang.The companies include two video surveillance companies -- Hangzhou Hikvision Digital Technology Co. and Zhejiang Dahua Technology Co. -- that by some accounts control as much as a third of the global market for video surveillance and have cameras all over the world. Also targeted were SenseTime Group Ltd. -- the world’s most valuable artificial intelligence startup -- and fellow AI giant Megvii Technology Ltd., which is said to be aiming to raise up to $1 billion in a Hong Kong initial public offering. Backed by Chinese e-commerce giant Alibaba Group Holding Ltd., the pair are at the forefront of China’s ambition to dominate AI in coming years.The move, which was announced after U.S. markets closed, came on the same day negotiators from the U.S. and China began working-level preparations for high-level talks due to begin Thursday in Washington. Entities on the list are prohibited from doing business with American companies without being granted a U.S. government license, though some have maintained relationships with banned companies through international subsidiaries. Hikvision and Dahua were suspended from trading Tuesday but iFlytek Co., one of the eight singled out, slid as much as 3.1% in Shenzhen.“Specifically, these entities have been implicated in human rights violations and abuses in the implementation of China’s campaign of repression, mass arbitrary detention, and high-technology surveillance against Uighurs, Kazakhs, and other members of Muslim minority groups” in Xinjiang, the U.S. Commerce Department said in a federal register notice published Monday.The move, first reported by Reuters, takes President Donald Trump’s economic war against China in a new direction, marking the first time his administration has cited human rights as a reason for action. Past moves to blacklist companies such as Huawei Technologies Co. have been taken on national security grounds. The president’s tariff war against Beijing, meanwhile, has been fought over issues such as intellectual property theft and control of technology as well as China’s broader industrial policy.SenseTime, Dahua and Megvii weren’t immediately available for comment outside of normal business hours. China’s Ministry of Commerce didn’t immediately respond to a faxed request for comment.“Hikvision strongly opposes today’s decision by the U.S. government and it will hamper efforts by global companies to improve human rights around the world,” the company said in a statement. “Punishing Hikvision, despite these engagements, will deter global companies from communicating with the U.S. government, hurt Hikvision’s U.S. businesses partners and negatively impact the U.S. economy.”It also comes as Trump faces growing pressure at home to support pro-democracy protests in the Chinese-controlled territory of Hong Kong. On Monday, Trump said he was hoping for a “humane solution” in a city where protests have grown increasingly violent.“They even have signs, ‘Make China Great Again,’ ‘Make Hong Kong Great Again,’” he told reporters. “They have tremendous signage.”None of the other companies had immediate comment. Some of the firms added to the list trade on Chinese exchanges, which weren’t open yet when the announcement was made in the U.S.What Our Economists Say:“With growth fading, the U.S. and China could both use at least a reprieve from trade tensions. A mini-deal was mooted. It now looks less likely.”\--Bloomberg Economics Chief Economist Tom OrlikRead the full analysis hereThe news broke just as Trump was attending the signing of a partial trade agreement with Japan and predicting a big week of talks with China.“We think there’s a chance that we could do something very substantial,” he told reporters of the China talks. “I think they’re coming to make a deal, we’ll see whether or not a deal can be made.”A Commerce Department spokesman said “today’s action is unrelated to the trade negotiations.”Besides Hikvision and Dahua, the companies put on the blacklist include artificial intelligence companies iFlytek, Megvii, SenseTime and Yitu Technologies.Also included are Xiamen Meiya Pico Information Co. Ltd, which bills itself as an “expert in digital forensics and cybersecurity in China,” according to its website, and Shanghai-based Yixin Science and Technology, a supplier of micro and nano fabrication equipment.IPO PlansThe ban complicates a planned initial public offering for Megvii. The company filed in August to go public in Hong Kong. The terms and timing of a listing weren’t disclosed, but people familiar with the company’s plans have said it’s seeking to raise as much as $1 billion. SenseTime lists Nvidia Corp. and Qualcomm Inc. among more than 700 global partners. Nvidia declined to comment, and Qualcomm didn’t immediately have a comment.Four of the eight companies put on the blacklist are already publicly traded in China. Dahua’s shares have risen 17% in the past year, while Hikvision is up 12.4%. iFlytek has gained 11.5% and Xiamen Meiya Pico Information has climbed 7.9%.When Huawei became the most prominent target for Trump administration export restrictions, its U.S. suppliers initially cut off contact with the Chinese technology company. After looking at the rules more closely, companies such as Intel Corp., Micron Technology Inc. and Qualcomm resumed at least partial supply.Human RightsThey have subsequently argued in Washington that blanket bans don’t have the targeted effect that the entity listings are intended to achieve because many of the products they supply to Chinese companies are readily available from their overseas competitors.A request for comment from the Chinese embassy in Washington wasn’t immediately returned.The move targets Chinese surveillance companies involved in the crackdown in Xinjiang, where as many as a million Uighur Muslims have been placed in mass detention camps, prompting criticism from around the world.“The U.S. government and Department of Commerce cannot and will not tolerate the brutal suppression of ethnic minorities within China,” said Secretary of Commerce Wilbur Ross said in a statement on Monday. “This action will ensure that our technologies, fostered in an environment of individual liberty and free enterprise, are not used to repress defenseless minority populations.”The blacklisting of these firms has been long in the making and national security advisers for months have been pushing for the president to move forward on the plan. But the timing is highly provocative, coming just days before China’s Vice Premier Liu He is schedule to arrive in Washington for high-stakes trade talks being watched by financial markets around the world.The White House in May had readied the sanctions package for surveillance technology companies accused of human rights violations but decided to hold back because of the ongoing trade negotiations.The Trump administration in June again considered the sanctions and had planned to roll them out with a human rights speech by Vice President Mike Pence on the anniversary of the Tiananmen Square massacre, Bloomberg has reported. The speech was postponed indefinitely -- at the request of Chinese officials -- so that Trump could secure a meeting with Chinese leader Xi Jinping at the Group of 20 summit in Osaka.Also to be placed on the Commerce Department’s “entity list” are the Xinjiang region’s public security bureau and 18 other municipal and county public security bureaus as well as the province’s police college.(Updates with share action from the third paragraph.)\--With assistance from Jennifer A. Dlouhy, Justin Sink, Ian King, Candy Cheng, Michael Hytha, Mark Milian, Edwin Chan and James Mayger.To contact the reporters on this story: Shawn Donnan in Washington at sdonnan@bloomberg.net;Jenny Leonard in Washington at jleonard67@bloomberg.netTo contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Sarah McGregor, Robert JamesonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Market Realist
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