ByteDance May Delay IPO, Face Lower Valuation – CNBC

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ByteDance May Delay IPO, Face Lower Valuation – CNBC
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Following is the unofficial transcript of breaking news from CNBC’s Deirdre Bosa on CNBC’s “The Exchange” (M-F, 1PM-2PM ET) today, Tuesday, July 6.

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ByteDance May Delay IPO

KELLY EVANS: Let's pick things up right there with shares of Didi dropping sharply after China revealed more details around its cybersecurity review of the company. Cybersecurity review includes banning new downloads of the app, the stock is plunging 20%, it's at 12 and change, that's well below its offering price of $14 for the IPO that just happened. It's down 30% from the recent intraday high. Deirdre Bosa is here with the broader implications for US investors and the latest this hour. Hi Deirdre.

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DEIRDRE BOSA: Hey Kelly. Well for Didi, those risks should have been well known, 15 pages in the IPO prospectus relating specifically to doing business in China. Before Didi, there was a crackdown on Ant Group, Alibaba and other tech giants, including Didi itself. Now Xi Jinping is sending a message that control and data protection, national security, more important than having global champions for tech companies. Now that theme has already been hitting the performance of other Chinese companies listed in the US, you just saw that from Dom, but the fallout could be even broader, the story isn't done. Shares of SoftBank, Didi’s largest shareholder, they were off 5% Monday in Tokyo, they recovered a little bit yesterday. Uber holds the second largest stake, it's down today that, though, there could be a tradeoff here since it competes with Didi in markets like LATAM as well. Meanwhile though, several sources are telling me that the crackdown could also affect TikTok parent, ByteDance, one of the most anticipated IPOs this year and the first Chinese company to really succeed in the West. I'm told that its listing could be delayed until 2022 and its valuation in the private market may take a haircut, an evaluation that I'm hearing was as high as $450 billion. Back to Didi though, there is now a key question that investors are asking and that is, did the Chinese authorities ask the company to delay its IPO and if so, as the Journal reported today, why weren't investors notified, early investors as well as ones that bought in through the IPO. Kelly, lots of questions surrounding and we're trying to get to the bottom of it.

EVANS: So Deirdre, did you just say that TikTok, ByteDance’s valuation was as high as $450 billion, half a trillion dollars for a private company, you know, a pre IPO company has to be almost unheard of, I guess that's just a side note. But on this issue itself, what do you think we watch for, for the next shoes to drop?

BOSA: That's a good question. I think you see how Didi handles this and we did get a statement from them sort of saying thank you to the Chinese regulators because they're going to emerge stronger from this but I think you also watch what the Chinese authorities do now, does the crackdown continue. We saw three more companies publicly listed newly IPO Chinese companies on US exchanges targeted over the weekend so is there going to be more? What happens with the big, big giants like Tencent and Alibaba and Meituan, there was this thinking that when Tencent received that huge fine in the billions of dollars that maybe it could move forward. Does that still apply or does the crackdown continue so those are all things to watch for as well as commentary from the CCP. We heard Xi Jinping’s comments last week, which, you know, some might say could have been writing on the wall. They said that they wanted to protect their own, you know, sovereignty and their own companies and it was very nationalistic so we'll continue to monitor what comes out of the party.

EVANS: It’s fascinating. Deirdre, thank you. Deirdre Bosa with the latest there.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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