Didi Global’s U.S. listing will surely go down as one of the most ill-fated in history.
The Chinese ride-hailing giant said Friday it plans to delist from the New York Stock Exchange and prepare for a listing in Hong Kong. It was only five months ago that the company raised $4.4 billion in its U.S. initial public offering.
The post-IPO Champagne was practically still bubbling when China’s cybersecurity watchdog took aim at the company by launching a probe over data security concerns. It didn’t get any better from there.
Aside from being an unmitigated disaster from start to finish, the tale of woe has far wider implications for markets. Didi has become something of a ‘poster child’ for market-related tensions between the U.S. and China.
The situation has escalated at a fairly rapid pace in recent days. The Securities and Exchange Commission moved to complete plans Thursday to require foreign companies listed in the U.S. to fully open up their books for inspection. SEC Chair Gary Gensler said just two jurisdictions have historically not played ball—China and Hong Kong. Companies could be delisted if U.S. authorities aren’t allowed access to audits for three consecutive years.
There is also more pressure coming from Chinese regulators, who are reportedly planning to ban companies going public on foreign exchanges through the controversial variable interest entity structure—used by the likes of
XPeng to list in the U.S. China’s securities regulator denied the reports
Either way, tensions between the world’s two largest economies on this particular issue are clearly worsening.
Investors in popular, U.S.-listed Chinese companies have had plenty of warnings, but the endgame may now be closer than ever.
*** Join Investor’s Business Daily news editor Ed Carson and Alissa Coram, IBD’s multimedia content editor, today at noon as they discuss lessons from this year and strategies for improving portfolio performance in 2022. Plus, they’ll take a look at stocks setting up ahead of earnings next week. Sign up here.
FTC Sues to Block Nvidia’s $40 Billion Arm Deal
The Federal Trade Commission sued to block U.S. semiconductor maker
Nvidia from acquiring U.K. chip designer Arm for $40 billion, saying the deal would give one of the largest chip companies control over the technology and designs its competitors rely on to develop their own chips.
- Blocking the largest-ever semiconductor chip merger would prevent the chip conglomerate from stifling the innovation pipeline for next-generation technologies, the FTC said, adding the new company would have the means and incentive to “unfairly undermine Nvidia’s rivals.”
U.K.-based Arm licenses intellectual property to other technology companies, including
SoftBank Group in September 2020.
- A Nvidia representative told Barron’s it would “continue to work to demonstrate that this transaction will benefit the industry and promote competition,” saying Nvidia is committed to “preserving Arm’s open licensing model.”
- The proposed acquisition came under increased scrutiny in recent months. The U.K. digital and culture secretary in November ordered a ‘phase 2’ inquiry of the deal, asking the government’s competition regulator to investigate potential antitrust and national security concerns.
What’s Next: Nvidia wants to close the deal by March 2022. If the deal isn’t completed by September 2022, SoftBank gets to keep a $1.25 billion breakup fee. The FTC’s administrative trial is scheduled to begin on May 10, 2022.
—Janet H. Cho
Lawmakers Approve Stopgap Government Funding
Lawmakers in both the House and the Senate passed a stopgap funding bill Thursday night to keep the federal government open through Feb. 18, thwarting an attempt by Republicans in the Senate to force a shutdown over employer Covid-19 vaccine and testing mandates.
- The bill, called a continuing resolution, includes $7 billion to care for and resettle refugees from Afghanistan. The House passed it by a 221 to 212 vote, while the Senate passed it by a 69 to 28 vote.
- Senate Republicans demanded a vote on an amendment that would block money to carry out the employer mandates, which were put in place by President Joe Biden. The vote failed.
- Biden told reporters after a speech at the National Institutes of Health that he had met with the minority and majority leaders in the Senate earlier and “there is a plan in place, unless somebody decides to be totally erratic.”
- The refugee funding includes $4.3 billion for the Defense Department to care for evacuees living on military bases, $1.3 billion for the State Department, and $1.3 billion for Health and Human Services for emergency housing and English language classes, the New York Times reported.
What’s Next: Congress now turns to other items, including raising the government’s borrowing limit and an annual defense policy bill. Democrats also are trying to finish their $2 trillion social spending and climate package before the end of December.
Google Delays Required Return to Office
- The tech company had planned to bring in workers three days a week under a hybrid model—mixing office and remote employment—starting Jan. 10, and ending its voluntary work-from-home period.
- But in an email to employees sent on Thursday, Google’s vice president of global security Chris Rackow said workers will no longer be required to return to the office on that date and said Google would wait until the new year to assess when U.S. offices can safely resume a “stable, long-term working environment,” according to excerpts published by CNBC.
Other big tech companies have also adjusted return-to-work plans in recent months.
Microsoft in September indefinitely postponed plans to bring workers back to its U.S. offices.
What’s Next: As the new Omicron variant and travel restrictions continue to create uncertainty, Google is unlikely to be the last company to rethink its return-to-office plans.
Zillow’s Home Sales Are Progressing Faster Than Expected
Real estate marketplace
Zillow Group is moving faster than expected to sell the homes it holds in its Zillow Offers homebuying operation, saying it has sold or is in the process of selling more than half the houses it snapped up in a buying spree this year.
- That buying spree—at too high a price—caught Zillow off guard with steep losses. It said it would shut the iBuying business—where it bought homes and flipped them for sale—and lay off one-quarter of its workers.
- On Thursday, Zillow said fourth-quarter revenue in the homebuying division will top its previous estimates, projecting $2.3 billion to $2.9 billion, up from a range of $1.7 billion to $2.1 billion given earlier.
- At the end of the third quarter, Zillow had 9,790 homes in its inventory and 8,172 homes under contract.
What’s Next: CEO Rich Barton said shuttering Zillow Offers would make the company’s balance sheet and business more capital-efficient. The company said it would use its cash to buy back $750 million in stock.
Tesla Unveils a $1,900 Battery-Powered ATV for Kids
Tesla’s newest model is meant to appeal to the younger crowd: a four-wheeled, all-terrain vehicle called the Cyberquad that sells for $1,900. Modeled after its full-size Cybertruck, this electric vehicle is meant for children aged eight and up.
- The Cyberquad has a 15-mile range and can reach a top speed of 10 mph. It features a steel frame, cushioned seat, adjustable suspension, rear disc brakes, and LED lights, and is powered by a 36V lithium-ion battery that can be recharged from a wall outlet.
- Tesla will begin shipping Cyberquads in two to four weeks, but isn’t guaranteeing arrival before the holidays, and as of now it is listed as “out of stock” on Tesla’s website. CEO Elon Musk recently tweeted of the Cybertruck: “Oh man, this year has been such a supply-chain nightmare and it’s not over!”
- Tesla is also hawking a $50 Cyberwhistle, modeled after its Cybertruck, made of “medical-grade stainless steel” with an integrated attachment feature. It notes that Cyberwhistles are final sales.
- The EV maker’s online store also offers lower priced items, such Cybertruck socks, for $30, a Cybertruck owl T-shirt for $35, children’s T-shirts for $25, and baby onesies for $25.
What’s Next: Musk said he would provide an update on Tesla’s products at its fourth-quarter earnings call in late January. Investors are awaiting updates on the Cybertruck coming out in early 2022, a new roadster, a semi truck, and an EV starting at $25,000.
—Al Root and Janet H. Cho
Do you remember this week’s news? Take our quiz below about this week’s news. Tell us how you did in an email to firstname.lastname@example.org.
1. Although foot traffic at U.S. bricks-and-mortar retail stores and malls was up this Black Friday compared with last year, it was still below 2019 levels. How much did foot traffic rise this year according to Sensormatic Solutions?
2. The new coronavirus variant, Omicron, rocked world markets this week. When does Moderna expect to have a booster vaccine tested and ready to file for U.S. authorization for the new variant?
a. As soon as January
b. As soon as February
c. As soon as March
d. As soon as April
3. Which asset manager plans to launch its first foreign-single country stock fund of Chinese stocks listed in mainland China, Hong Kong, and the U.S. in early 2022?
b. State Street
d. Charles Schwab
4. What is the consumer-price inflation rate the Organization for Economic Cooperation and Development is forecasting the U.S. to average next year? The expectation doesn’t account for the Omicron variant.
5. After stepping down as CEO of Twitter this week, Jack Dorsey announced that Square, the digital payments company he heads, will be changing its name to:
—Newsletter edited by Liz Moyer, Camilla Imperiali, Steve Goldstein, Rupert Steiner