🇨🇳 China’s Great Delisting
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Hey Snackers,
Rap Monster needs a break: K-pop sensation BTS is taking its first “extended period of rest” since 2019. The band’s seven members can spend the holidays with family for the first time since 2013.
Stocks closed higher to kick off the week as investors digested early data that suggests Omicron may be causing milder illness than initially feared. But it could take weeks before scientists understand the new variant’s effects.
After DiDi, more Chinese tech giants could ditch the US stock market — or be forced out
NYC to Hong Kong ETA… 15 hours and 35 minutes. Financial ties between the US and China are coming undone as political tensions escalate. The latest case study: DiDi, aka the Uber of China, which went public in the US in June in the largest US IPO of a Chinese company since Alibaba. But DiDi's debut caused some #drama: China wanted DiDi to pause its IPO until it could show Chinese data was safe. So Chinese regulators banned DiDi from app stores and started investigating the company. Now...
- DiDi, delisted: Last week, DiDi said it would immediately start delisting its shares from the NYSE, saying it plans to relist in Hong Kong. Bloomberg earlier reported that Chinese regulators were behind the reversal.
- DiDi shares have plunged 20% since the announcement. Shares of other Chinese tech giants also dropped, with Alibaba (“the Amazon of China") and Nio ("the Tesla of China") leading the losses.
Taking stock... China has been cracking down on its tech titans this year, levying major fines and imposing strict anti-monopoly laws. DiDi’s delisting marks a dramatic escalation. DiDi's now worth $31B — less than half its value at IPO. And it's not the only one...
- In May, there were 248 Chinese companies with a combined $2.1T market cap on US exchanges. $1T+ of that value has been erased.
- Not just DiDi: Since 2019, more than a dozen US-listed Chinese companies have sought alternative listings in Hong Kong.
The Great Delisting could be coming… and not just because of China. Last week, the SEC finalized rules to forcibly delist foreign companies that don't follow auditing requirements. The goal: Avoid situations like Luckin's fake earnings. Meanwhile, Beijing is tightening data-privacy regulations that’ll make it harder for Chinese companies to list on foreign markets. Escalating US-China tensions could mean a wave of Chinese tech companies leaving US markets — which could hurt both American and Chinese investors.
DoorDash launches ultrafast delivery in NYC, but speedy snacks may not be profitable
10-minute Doritos… The race to deliver snacks in under 15 minutes is getting spicy. Yesterday DoorDash launched an ultrafast-delivery service in NYC that delivers snack staples like chips and candy to customers in 10 to 15 minutes for a $1 to $2 fee. How it works:
- Deliveries are limited to an area near Dash’s tiny urban warehouse (aka: “DashMart”) in NYC’s Chelsea neighborhood. Dash plans to expand supercharged delivery to other DashMarts in NYC and beyond.
- Full-time employees who make $15/hour with benefits will complete the extra-quick deliveries, a big shift from Dash’s norm of using gig workers. Quick-delivery rivals Gorillas and Jokr also employ full-time workers.
Ultrafast growth… Online grocery sales more than doubled last year, inspiring a wave of startups focused on fast urban delivery. This year 15 quick-delivery companies have raised nearly $8B. Jokr, Gorillas, and Flink — all under two years old — each hit $1B valuations. GoPuff, which launched in 2013, is now worth $15B.
- But fast Fritos don’t work everywhere: Delivery companies say the 15-minute model works only in dense cities with high order volumes.
NYC is an ultrafast-delivery lab… But consumers’ broader appetite is still uncertain. As the densest city in America, the Big Apple is perfect for delivery experimentation. But superfast delivery is risky even there: Last week, 1520 closed after it spent all its cash trying to win customers. Because DoorDash’s and Uber Eats’ regular delivery businesses still aren’t profitable — and speedy delivery has even higher costs — some doubt 15-minute snacks will ever be profitable.
What else we’re Snackin’
- Cron: NYC said it’s making employee vaccinations mandatory for all private employers. Mayor de Blasio called it a “pre-emptive strike” against Omicron.
- GlobalEntry: The US began requiring international travelers to provide a negative Covid test not more than 24 hours before their flights, a tightening from 72 hours.
- Trumped: The SPAC that plans to merge with former President Donald Trump’s media company is being investigated by federal regulators over trading and communications before the deal was announced.
- EVestigate: The SEC is investigating Tesla over complaints that it failed to properly notify customers of its solar system’s fire risks. Meanwhile, Lucid shares fell 16% after it received an SEC subpoena related to its financials.
- Tense: The US announced a diplomatic boycott of the Winter Olympics in Beijing over China’s human-rights abuses, a move that could further strain the US-China economic relationship.
Tuesday
- Earnings expected from: AutoZone and Stitch Fix
Authors of this Snacks own shares of: Uber, Tesla, Luckin Coffee, Spotify, Amazon, and Google
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