According to the latest regulatory filings, T. Rowe Price, which has more than one trillion U.S. dollars in assets under management, slashed the already sharply shrunk valuation of Ant by another 28%. Puxin Group participated in the round of overseas financing of Ant Group with a post-investment valuation of US$150 billion in 2018. Inverting the investment amount and shareholding ratio at that time, they now only value Ant at US$56.8 billion, which has shrunk by 86% from the US$412.8 billion valuation at the end of October 2020.
Probably everyone will link the plunge in Ant’s valuation with Ma Yun’s shocking speech on the Bund. Instead of making investors accept the transition from finance to technology, the unfounded anger directly gave Ant’s valuation Here comes a cut in the waist, no, it’s a cut in the knee!
But don’t be fooled by appearances. Although the adjustment of Ant’s valuation has changes in regulation, market and investor perception and sentiment, the core problem still lies with itself; , Every Internet company needs to think and overcome.
First, after the dividends in the Internet era have declined, traffic costs have increased.
According to the annual report of Hang Seng Electronics, it can be seen that Ant Fund, a subsidiary of Ant, achieved a revenue of 5.4 billion in the first half of 2022, but its profit was only 80 million. The high sales revenue and very low sales profit margin are staggering. If you think about it for a while, you will know that the huge cost in the middle is mainly the drainage fee at the parent company level, but if you look at the profit changes of Ant Fund in a longer period, you can see that the profit has declined in the past few years. An adjustment to the increasingly tense new traffic.
Not only Ant, but Tencent Caitong, which uses WeChat as its core structure, is also facing a similar situation. How can an APP with a MAU of more than one billion further expand its coverage in China with a population of 1.4 billion? This can already give a negative answer within the scope of mathematics. In the early stage, with the spread of Internet dividends and the ability of leading institutions to rely on capital to consolidate their market share, these institutions have eaten the largest and sweetest part of this cake, but the question is, “and then”? Is it to set sail to explore overseas markets, or to diversify and deepen cultivation? The former is difficult to succeed due to the constraints of the local nature of the Internet, while the latter is directly stopped by domestic supervision. The new intensive growth method is a topic that Internet companies must think about deeply after the extensive growth stage.
Second, finance or technology?
The debate on whether Ant is a technology company or a financial company has come to an end after the Bund shouted, and the regulatory response has been concluded. But even if we don’t consider regulatory considerations and disassemble part of Ant’s business in depth, we can see the “financial” essence of Ant in a “technical” shell. Take its Huabei borrowing business as an example. On the surface, Ant It has indeed played the role of “drainage” and “risk identification”, but its high fees and superior Party A status are not enough to explain Ant’s technological capabilities. The result of the combined effect of financial institutions’ “lack of assets” and residents’ “leverage”.
In the past few years, financial institutions have been able to accept the disparity in the distribution of commercial interests between Ant A and Party B, not because they have “lost their minds”, but because of the financial environment. If the pattern of monetary easing is reversed, can the huge amount of in vitro assets in the ant system still circulate? From this perspective, even if Ant is labeled as a “technology” attribute, its cyclical characteristics are still “financial”. The reason why everyone is confused is that the high growth of leading Internet companies in the past few years has covered up some cyclical attributes.
The core connotation of finance is risk management. Regardless of whether the level is high or low, history has proved countless times that only capital is the most important factor in resisting risks. Playing with the essence of finance but not following the rules of finance is a must for any country. Unbearable and unacceptable.
Third, are Internet companies that are too big to fail a blessing or a curse to China’s Internet and the entire economy?
No one does not welcome reasonable and well-intentioned capital; but when the capital reaches a certain level and is large enough to obtain higher profit growth through monopoly, it will change its taste. The bombardment on the Bund is just a starting point of chance, but how to determine the positive role of Internet platform companies is a question that Chinese regulators must think about. Zoos will never hand over the role of managers to tigers and cheetahs. The boundaries and behaviors of leading institutions must be included in the scope of supervision. If China’s Internet only has Alibaba and Tencent, then the vitality of China’s Internet will come to an end. . Youbyte laid off the entire investment department before, who will be behind? (Fortune Chinese website)
The author Fu Wei is a columnist of Fortune Chinese website and a senior wealth management practitioner
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