Published on October 27, 2020 by Holly Porter

What’s been happening in the commercial world over the past week? Read on to find out!

World’s Largest IPO

Jack Ma’s Ant Group is set to go public in Shanghai and Hong Kong in the coming weeks. Reportedly, there will be 1.67bn shares listed on each exchange. The company is affiliated with the Alibaba Group but is also now the world’s highest-valued FinTech company and most valuable unicorn company. It owns Alipay which is China’s largest digital payment platform, serving 1bn users. There are two reasons why this listing has caught attention.

Firstly, Ant Group is expected to raise nearly $30billion, overtaking Saudi Aramco as the world’s largest IPO. The Saudi Arabian Oil Company raised $25.6bn in December last year.

Secondly, this gives an insight into China’s strong IPO market. According to Ernst & Young, one-fifth of global public listings from January-September this year took place on the Shanghai Stock Exchange, surpassing Nasdaq as the most popular. In total, 45% of 2020 global IPOs took place using the Shenzhen, Hong Kong and Greater China stock exchanges. There has also been an increase in the number of Chinese companies listed in the US, with 23 so far this year. This accounts for half of the US’ 2020 cross-border listings.

How might the US election affect this trend? What were some of the predicted ‘Unicorns’ for 2020?

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Google Sued For Anti-Competitive Practice

Tech Giant Google now faces another legal challenge for anti-competitive practice. The move comes only weeks after the conclusion of a 16-month congressional investigation into the power held by Big Tech, ie. Amazon, Apple, Facebook, Google and Microsoft.

Alphabet, Google’s parent company, has been accused of holding an illegal monopoly over the online search and advertising market. From July 2010-2020, Google has accounted for 86.86% of all global web searches, with the nearest competitor Bing recording a 6.43% market share. Google is accused of using its internet gatekeeper role to stifle competitors, mainly through exclusionary agreements. The key example here is the agreement Google concluded with Apple to make Google the default search engine for Safari on Apple products.

The Justice Department’s antitrust lawsuit against Google marks the largest legal action it has taken in two decades to confront a Tech Giant’s power. In an era of increasing regulation, if the lawsuit is successful, Google may be forced to split its assets.

Despite the news, Alphabet’s share price grew over 1%.

What do you think the Department of Justice hopes to achieve through this lawsuit? Do you think Google has behaved illegally? 

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Netflix Records Poor Q3 Figures

Wall Street analysts expected Netflix to see a Q3 subscriber-growth of over 3.3m. This figure was based on the massive growth of nearly 26m in the first six months of the year. However, the US media services provider only recorded 2.2m new users from July-September.

Netflix also saw lesser than expected earnings for Q3. Initial predictions from analysts would see a $2.13 earning per share. Instead, the figure is closer to $1.75 per share.

There are several reasons why Netflix’s growth may have stalled recently. The release of the film ‘Cuties’ was controversial in the US and highlights once against the importance of reputation for a company. Secondly, Netflix floated rumours about a potential price increase. Given an increasingly crowded online streaming market following the launch of Disney+, to remain competitive, Netflix may need to address this. Lastly, perhaps consumers are concerned about the lack of new releases due to production halts globally.

This all contributed to a 5% plunge in Netflix’s share price.

What do you think is the most influential reason for Netflix’s poor Q3 performance?

Words by: Holly Porter

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