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· Posted on
February 21, 2024

Ant Financial cops a $984 million USD fine and feelin' fine after a few years in the regulatory wilderness

Ant has been fined a fine of $984 million for 'violating regulations'.

What's the key learning?

  • Ant Financial will have to pay a fine of $984 million for violating regulations and will do a $6 billion share buy back that values the company at a 75% discount to its proposed IPO price.
  • While a regulatory fine might seem like bad news on the surface, it can sometimes bring a silver lining... especially when it signals the end of a period of uncertainty.
  • Facebook was fined $5 billion USD from the Cambridge Analytica scandal, but after the news, Facebook's shares actually rose almost 2%.

👉 Background: Ant Financial is a subsidiary of e-commerce behemoth Alibaba. It's grown to become a leading fintech in China that offers loans, investment products, and insurance products

👉 What happened: Back in 2020, Ant Financial was going to IPO for an estimated $300 billion USD. Then, the Chinese government got involved and KYBOSHED the IPO... after Alibaba founder Jack Ma criticised the government.

👉 What else: Now, Ant has been fined a fine of $984 million for 'violating regulations'. On top of the fine, Ant will do a $6 billion share buy back that values the company at a 75% discount to its proposed IPO price. And while this might sound like bad news, investors are quite pleased.

What's the key learning?

💡While a regulatory fine might seem like bad news on the surface, it can sometimes bring a silver lining... especially when it signals the end of a period of uncertainty.

💡 On the one hand, the fine shows the strength of regulators who won't tolerate companies that violate laws—like criticising the government. But on the other hand, it signals that this sad and sorry regulatory episode is finally behind Ant.

💡This is similar to when Facebook was fined $5 billion USD from the Cambridge Analytica scandal. After the news, Facebook's shares actually rose almost 2%. Similary, Alibaba saw its shares rise by over 3%.

‍

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