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Forum - Wall Street Pit (Baidu - BIDU)    Stock Due Diligence for All

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From: mflutie1 (Rep: 23)Date: 05/22/2020 12:10
Forum: Wall Street Pit - Msg #2848730 - List BIDU msgs Thread #674159213 (Rec: 3)
some to consider that could drop significantly due to the Holding Foreign Companies Accountable Act (HFCA) (Chinese companies delist from U.S. stock exchanges). Even if they follow all the rules, sympathy panic could hit them hard.
Add in political issues could have a negative effect. Hong Kong down 5.7% overnight as China tightens it's grip! China has scrapped it's growth target (which they probably fudge anyway). China/USA financial cold war. A lot in the mix- crackdowns coming. Supply chains leaving China for other countries.

BABA reported adjusted earnings of $1.30 per share, up from $1.28 a year earlier. Revenue grew 22% to $16.14 billion. Wall Street expected earnings of 85 cents on revenue of $15.1 billion. The results were for its fiscal fourth quarter for the period ended March 31.
BABA CFO Maggie Wu statement
"Alibaba’s financial statements have been consistently prepared in accordance with U.S. GAAP accounting measures and were beyond reproach. “The integrity of Alibaba’s financial statements speak for itself, we have been an SEC filer since 2014 and hold ourselves to the highest standard,” she told analysts on a conference call. “We will endeavor to comply with any legislation whose aim is to protect and bring transparency to investors who buy securities on U.S. stock exchanges.”
....and BABA is down 5%!

BIDU, the Google of China has just reported solid first quarter earnings, with Q1 Non-GAAP EPS of $1.25 beating consensus expectations by $0.69. Revenue of $3.18B dropped 7% from a year ago, but easily beat the $3.1 billion consensus.
Baidu is already responding to the possible legislation and the Nasdaq's plans. On Thursday, Reuters reported that Baidu "is considering delisting from the U.S. Nasdaq."
....and BIDU is down 5%!

SINA
yes...down 6% today

If the House joins the Senate to pass & signed into law it by President Trump (ya think?) The Holding Foreign Companies Accountable Act (HFCA) will have two main requirements:
Foreign-owned companies (sponsors made it clear that the bill is aimed at Chinese companies, but the language says stocks from any foreign issuer) must be able to prove that they are neither owned nor controlled by a foreign government.
And they must submit their financials for review by an American audit firm overseen by the U.S. Public Company Accounting Oversight Board, which is something that Chinese law does not currently permit.
Nasdaq is already contemplating new regulations that will tighten audit standards on new IPOs.


These might actually go OTC. Change the symbol. Wouldn't be surprised. But that would also probably hit the stock prices lower. Senator Marco Rubio made a point of criticizing OTC trading as well, blasting the "fraudulent, opaque Chinese companies that are listed on U.S. exchanges and trade on over-the-counter markets." This could hint at future legislation targeting OTC trading of Chinese stocks as well, but it is not a part of the current HFCA legislation.
OTC exchanges have less liquidity than the NYSE and NASDAQ, which could make it harder to buy and sell shares. Smaller trading platforms like Robinhood also don't offer access to OTC exchanges, and investors using those platforms would be forced to liquidate their shares once they're delisted....dropping the share prices.

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