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We've rounded up some of the most anticipated IPOs — as well as IPOs that already happened — to help get you up to speed on each company's financials, plans and risk factors.
Everything you need to know about upcoming IPOs
Roblox
Roblox originally expected to go public via direct listing on the New York Stock Exchange in February. In late January, however, Reuters reported that Roblox had to delay its IPO due to SEC scrutiny over how it recognizes revenue. But on Feb. 22, the company announced that it's finally pulling the trigger on its listing on March 10.
Squarespace
Squarespace filed confidentially on Jan. 27, but didn't specify if it would go public through IPO or direct listing. The company was last valued at $1.7 billion in December 2017.
Coinbase
Coinbase was founded in 2012 and announced in December 2020 that it filed confidentially to go public. The cryptocurrency exchange filed its S-1 on Feb. 25 to go public via direct listing on Nasdaq. And depending on who you ask, the Coinbase IPO could be the latest symptom of a major financial bubble or a significant milestone in the restructuring of the global financial system.
Ant
The eagerly-anticipated listing was set to be the world's biggest IPO, raising almost $37 billion at a $313 billion valuation. The deal was then put on ice by regulators.
Instacart
Will Instacart IPO in 2021? It's looking pretty likely. In January the company tapped Goldman Sachs' lead internet banker, Nick Giovanni, as CFO.
ZipRecruiter
In December 2020, Reuters reported that ZipRecruiter, the buzzy employment platform, hired Goldman Sachs and JPMorgan Chase to help prepare for the company's IPO. Sources said that ZipRecruiter is looking for a valuation from $3 billion to $5 billion.
Coursera
Also in December 2020, Coursera — the online learning platform — was said to be eyeing an IPO, according to Bloomberg sources. The company is hoping to be valued at around $5 billion when it goes public sometime this year.
Coupang
Coupang hasn't yet disclosed its target listing date or share price. But it's expected to be the largest U.S. IPO by a foreign company since Alibaba went public in 2014.
Jingdong Logistics
JDL's anticipated $5 billion IPO in Hong Kong could value ecommerce giant JD.com's logistics arm at $40 billion, according to Bloomberg. JDL doesn't make a profit, but the trend lines are good.
Everything you need to know about past IPOs
Bumble
They say money can't buy you love, but it can buy five SuperSwipes. And on Feb. 11, money could also get you an ownership stake in Bumble. Bumble's stock price jumped more than 85% within a few hours of its Nasdaq debut, raising $2.15 billion through the IPO process.
Kuaishou
Kuaishou managed to raise $5.4 billion in the lead-up to the Hong Kong stock exchange debut — no internet company besides Uber has ever raised more through an IPO. Shares tripled during its Feb. 5 debut.
Airbnb
There aren't many tech companies harder hit by COVID-19 than Airbnb. When the pandemic took hold, the company's business was undermined and its plan to go public this year looked totally shot.
The company's share price more than doubled in its trading debut, from the $68 price set the night before to $146 at opening.
Wish
Wish priced its share at the high end of its range at $24, raising $1.1 billion for the company in its IPO and bumping its valuation up from $11 billion to $17 billion.
Interview with Poshmark co-founder Tracy Sun
The company's stock price more than doubled within a few minutes of its Nasdaq debut mid-January, rising from $42 to $103. Protocol spoke with co-founder Tracy Sun about the importance of social commerce, why users are spending so much time on the app, and how the company is investing for long-term growth.
Affirm
Affirm was one of the most highly anticipated debuts of the year and it didn't disappoint, soaring on the Nasdaq on its first day of trading. In an interview with the company's CEO, Max Levchin told Protocol that the the level of effort and intensity that our team brought to bear made him feel like he just wasn't working hard enough.
Qualtrics IPO debut
Shares of the company, which provides customer sentiment monitoring, ended the day of its debut up 51%, giving it above a $24 billion valuation, higher than Wall Street initially expected.
Snowflake IPO debut
After raising $3.4 billion in the largest IPO ever pulled off by a software company, Snowflake has an impressive foundation to continue building out its data warehousing services for a data-mad world.
Sumo Logic IPO debut
Sumo Logic wants to be the alarm system for the cloud, and raised $326 million to further its monitoring efforts in its public debut.
JFrog IPO debut
JFrog closed its first day of trading at $64.79, valuing the 12-year-old software development tool company at more than $6 billion.
C3.ai IPO debut
Shares of C3.ai went gangbusters on the company's first day of trading on the New York Stock Exchange, raising $51 million.
DoorDash
After confidentially filing for an IPO back in February 2020, market turmoil caused by the pandemic put a halt to its listing. Also, DoorDash's risk factors section is long — really, really long. It priced its shares at $102 apiece the day before trading opened, but the stock began trading at $182, a giant pop for the company. It ended up closing at $189, up 85% for the day.
Unity
Back in August 2020, Protocol took a deep dive in game-engine maker Unity's S-1, parsing out everything that could possibly go wrong with the IPO. Among the threats: Unity is beholden to Apple and Google, saying the two companies could "limit or discontinue our or our customers' access" to their platforms and app stores. A stark reminder that unless you're one of the Big Five, you're at the mercy of Big Tech. Just a month later, the company IPO'd; it raised $1.3 billion in an unusual IPO, where Unity "asked investors to give us their interest at different prices in different quantities specifically," the company's CFO Kim Jabal told Protocol at the time.
Palantir
Peter Thiel's secretive data analytics/government contracting company never made a profit, but just ahead of its planned direct listing, the company unveiled a ton of financial data, showing just what makes it tick. Unfortunately for Palantir, investors weren't too secretive about how they felt about the company: Though its stock opened at $10 per share, it spent the day slipping, closing down more than 5% at $9.50, marking the end of a pretty tumultuous listing process.
This story will be continually updated.
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Making the economy work for Black entrepreneurs
Funding for Black-owned startups needs to grow. That's just the start.
"There is no quick fix to close the racial wealth and opportunity gaps, but there are many ways companies can help," said Mastercard's Michael Froman.
Michael Froman is the vice chairman and president of Strategic Growth for Mastercard.
When Tanya Van Court's daughter shared her 9th birthday wish list — a bike and an investment account — Tanya had a moment of inspiration. She wondered whether helping more kids get excited about saving for goals and learning simple financial principles could help them build a pathway to financial security. With a goal of reaching every kid in America, she founded Goalsetter, a savings and financial literacy app for kids. Last month, Tanya brought in backers including NBA stars Kevin Durant and Chris Paul, raising $3.9 million in seed funding.
Building better relationships in the age of all-remote work
How Stripe, Xero and ModSquad work with external partners and customers in Slack channels to build stronger, lasting relationships.
Every business leader knows you can learn the most about your customers and partners by meeting them face-to-face. But in the wake of Covid-19, the kinds of conversations that were taking place over coffee, meals and in company halls are now relegated to video conferences—which can be less effective for nurturing relationships—and email.
Email inboxes, with hard-to-search threads and siloed messages, not only slow down communication but are also an easy target for scammers. Earlier this year, Google reported more than 18 million daily malware and phishing emails related to Covid-19 scams in just one week and more than 240 million daily spam messages.
Everything you need to know about the Coinbase direct listing
Coinbase's IPO valuation could be the largest by a U.S. tech company since Facebook went public.
Coinbase will go public on Feb. 25.
Jane Seidel is Protocol's social media manager. She was previously a platform producer at The Wall Street Journal, creating mobile content and crafting alert strategy. Prior to that, she worked in audience development at WSJ and on digital editorial at NBC Universal. She lives in Brooklyn.
Coinbase, the cryptocurrency exchange, filed its S-1 on Feb. 25 to go public via direct listing on Nasdaq. In the lead-up to the IPO, Coinbase shares traded on the Nasdaq Private Markets at $373, yielding a company valuation of over $100 billion, per Axios. If share prices remain at or above these levels, Coinbase's IPO valuation could be the largest by a U.S. tech company since Facebook went public in 2012. The company hasn't yet set a date for its trading debut.
Depending on who you ask, the Coinbase IPO could be the latest symptom of a major financial bubble or a significant milestone in the restructuring of the global financial system. Coinbase's mission is to "create an open financial system to the world." It believes the prevailing system of global finance, with the U.S. dollar serving as the global reserve currency, is outdated and inefficient. This mission pits the interests of Coinbase squarely against many of the world's most powerful nations, making regulation a grave and — if cryptos continue gaining momentum — probable risk.
What does Coinbase do?
<p>If you want to buy Bitcoin or Ethereum or other crypto, you can begin the costly, labor-intensive and extremely technical process of mining. Or you can turn to a crypto exchange like Coinbase, which allows retail buyers and sellers to meet in the middle.</p><p>Coinbase also believes today's financial system relies on too many intermediaries (banks, brokers, clearinghouses, payment processors, exchanges, etc.), and that relying on this web limits access, efficiency and costs for users. The internet transformed the way we communicate and live, and Coinbase believes that the financial system has hardly been affected in the same way. By enabling anyone with an internet connection — and a bank account, with funds to invest — to easily invest in crypto assets, Coinbase aims to "democratize" access to the crypto economy. </p><p>The company isn't vastly unlike other cryptocurrency exchanges, which have come and gone since crypto trading hit the zeitgeist in 2017. General finance apps have jumped into crypto as of late, including Robinhood and Square, and crypto-specific competitors include Gemini, Kraken and Binance. Coinbase has stuck around largely because of its efficiency, but also by keeping users' personal data secure. "From the early days, we decided to focus on compliance, reaching out to regulators proactively to be an educational resource," CEO Brian Armstrong writes in the S-1. "We invested heavily in cybersecurity, built novel key storage mechanisms, and obtained a cybercrime insurance policy." </p><p>The company's exchange service is its main offering, but it also has a few other lines of business. <a href="https://commerce.coinbase.com" target="_blank" rel="noopener noreferrer">Coinbase commerce</a> provides online retailers with software that lets them accept crypto payments (like PayPal, but for crypto). <a href="https://www.coinbase.com/card" target="_blank" rel="noopener noreferrer">Coinbase Card</a> is in the early stages, giving users a physical Visa debit card and accompanying app. Coinbase even offers its own cryptocurrency, <a href="https://www.coinbase.com/usdc" target="_blank" rel="noopener noreferrer">USD Coin</a>, built on Ethereum and tied to the U.S. dollar, so the price remains stable. </p><p>At the end of 2020, the company had 2.8 million monthly active users and 43 million verified users (about 6.5% of users are active, monthly). </p>Coinbase's financials
<p>Coinbase had a stellar 2020. It recorded $1.1 billion in revenue for the year, up 136% from the $483 million in revenue from 2019. This increase in revenue tracks closely with the 142% increase in trading volume between 2019 and 2020.</p><p>Coinbase derives almost all of its net revenue (96% in 2020) from transaction fees, which have been correlated with fluctuations in the value of cryptocurrencies. The rise in institutional trading volume has been a major source in revenue growth for Coinbase over the course of 2020. For instance, in Q1 2020, institutional trading volume rose to 6x the volume of Q1 2019. And even over the course of the year, institutional trading volume went from $18 billion in Q1 2020 to $57 billion in Q4 2020. Retail trading volume went from $12 billion to $32 billion in that same timeframe. </p><p>Bitcoin accounted for approximately 41% of trading volume on Coinbase in 2020, followed by Ethereum (15%) and other crypto assets (44%). </p><p>Coinbase posted a net income of $322 million in 2020, which is pretty incredible for a company that says it's choosing "to prioritize growth because we believe that global scale is central to achieving our mission and the potential of our business model." The biggest expenses in 2020 were "general and administrative," which represented 22% of total revenue, and "technology and development," which represented 21% of total revenue. In 2019, Coinbase reported a net loss of $31 million. </p>What could go wrong?
<p>The short answer: a lot.</p><p>Coinbase is driven by a techno-utopian/libertarian mission, and its long-term success is predicated on overhauling global power structures. This comes with a long list of risk factors, but some of the most significant include: regulation by a cohort of nations to protect the central banking system, loss of public confidence in cryptocurrencies and revenue loss that would come with greater stability in cryptocurrency prices. </p><p>"If the world ran on a common set of standards, that could not be manipulated by any company or country, the world would be a more fair and free place, and human progress would accelerate," Armstrong wrote in the S-1's introduction. </p><p>There's a lot to unpack here, but let's start with the bit about financial standards that "could not be manipulated by any company or country." This vision would mean the U.S. dollar loses its status as the dominant global reserve currency, <a href="https://www.federalreservehistory.org/essays/bretton-woods-created#:~:text=The%20Bretton%20Woods%20system%20was,gold%20at%20the%20official%20price." target="_blank" rel="noopener noreferrer">a system established</a> at Bretton Woods following World War II. It would render The Federal Reserve — with its fiscal toolkit intended to provide economic stability — obsolete. With cryptocurrencies such as Bitcoin, there are a finite number of tokens, so quantitative easing isn't possible. </p><p>It isn't in the interest of many nations, particularly the U.S., to give up central banking control due to cryptocurrencies becoming the global reserve currency. </p><ul><li>Coinbase writes that new regulations and laws "may adversely impact the development of the crypto economy as a whole and our legal and regulatory status in particular by changing how we operate our business, how our products and services are regulated, and what products or services we and our competitors can offer, requiring changes to our compliance and risk mitigation measures, imposing new licensing requirements, or imposing a total ban on certain crypto asset transactions, as has occurred in certain jurisdictions in the past."</li><li>It also details how loss of institutional support could impact its business: "We may face difficulty establishing or maintaining banking relationships due to our banking partners' policies and some prior bank partners have terminated their relationship with Coinbase or have limited access to bank services. … In addition, financial institutions in the United States and globally may, as a result of the myriad of regulations or the risks of crypto assets generally, decide to not provide account, custody, or other financial services to us or the cryptoeconomy generally."</li></ul><p>This regulatory uncertainty hinders institutional adoption of cryptocurrencies. </p><ul><li>For instance, in January, Ray Dalio of Bridgewater Associates <a href="https://www.bridgewater.com/research-and-insights/our-thoughts-on-bitcoin" target="_blank" rel="noopener noreferrer">wrote</a>: "For now, though, we do not see it as a viable storehold of wealth for large institutional investors, thanks mainly to a high degree of volatility, regulatory uncertainty, and operational constraints. Rather, we see it as more like buying an option on potential 'digital gold' — it has a wide cone of outcomes, with one path leading to it becoming a true institutionally accepted alternative storehold of wealth."</li></ul><p>Now let's tackle the first part of Armstrong's statement about a world that runs "on a common set of standards." For Coinbase to succeed, it needs cryptocurrencies to remain valuable and worth transacting.</p><ul><li>"The development of new technologies for mining, such as improved application-specific integrated circuits (commonly referred to as ASICs), or changes in industry patterns, such as the consolidation of mining power in a small number of large mining farms, could reduce the security of blockchain networks, lead to increased liquid supply of crypto assets, and reduce a crypto's price and attractiveness," Coinbase writes.</li><li>Another potential risk factor comes with "security issues, bugs, and software errors" of crypto assets that "could adversely affect its price, security, liquidity, and adoption."</li></ul><p>Finally, there's a contradiction within Coinbase's current business model that bears mentioning: Coinbase derives most of its revenue from transaction fees, which are highly correlated with fluctuations in the value of cryptos. The contradiction lies in the fact that cryptocurrency price volatility is seen as one of the primary barriers in something like Bitcoin realizing its potential as an exchange currency rather than an asset class. </p><p>Coinbase believes this isn't actually an issue, since the dynamics will change over the long term. The company writes: </p><ul><li>"Over the long term, we expect further diversification of market participants, to add support for more crypto assets, and for crypto asset use cases to expand. We believe these factors will contribute to diversification in the composition of our Trading Volume and reduce the correlation to both Bitcoin price and Crypto Asset Volatility, subsequently leading to lower volatility in transaction revenues. Further, we expect that diversifying our sources of revenue towards subscription and services revenue will contribute to less fluctuation in our results from operations."</li></ul>Who gets rich?
<p>Coinbase has divided its shares into Class A and Class B, with Class B receiving 20 votes per share and Class A receiving only one. Class B shareholders are also allowed to convert their shares to Class A at any time.</p><p>This setup makes it difficult to say precisely which entities will own Coinbase when it makes its trading debut. As of Jan. 31, 2021, some of Coinbase's largest institutional shareholders included Andreessen Horowitz, Tiger Global, Ribbit Capital, Union Square Ventures and Paradigm. Some of the largest individual shareholders included Frederick Ernest Ehrsam III (the co-founder of Coinbase), Armstrong and CPO Surojit Chatterjee.</p>What people are saying
<ul><li><strong>"The @coinbase<a href="https://twitter.com/coinbase" target="_blank" rel="noopener noreferrer"> </a>Direct Listing will either confirm direct listings as a reasonable on-ramp for companies or kill it all together by making retail the true bag holders. If institutional investors use this period to manipulate the stock from a $54B valuation on Jan29 to $100B now... And then sell to retail at $100B or greater, it will be the ultimate form of stock manipulation. If the stock snaps back at a much lower valuation, each private txn preceding the DL seems manipulative. Good luck to all the players...I'm sitting out. The process stinks."</strong> —Chamath Palihapitiya <a href="https://twitter.com/chamath/status/1364960892958433285" target="_blank" rel="noopener noreferrer">on Twitter.</a></li><li><a href="https://twitter.com/chamath/status/1364960892958433285" target="_blank" rel="noopener noreferrer"></a><strong>"Given the Crypto Cycle, I expect Coinbase IPO to be very successful and price to pump hard. A NYSE 'exchange' security trading >$100B should help drive up Crypto Exchange tokens. I can see a bull market narrative where something like UNISWAP is compared to Coinbase in cap."</strong> — Bob Loukas <a href="https://twitter.com/BobLoukas/status/1364974896493826054" target="_blank" rel="noopener noreferrer">on Twitter</a>.</li></ul>Blockchain, QR codes and your phone: the race to build vaccine passports
Digital verification systems could give people the freedom to work and travel. Here's how they could actually happen.
One day, you might not need to carry that physical passport around, either.
Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.
There will come a time, hopefully in the near future, when you'll feel comfortable getting on a plane again. You might even stop at the lounge at the airport, head to the regional office when you land and maybe even see a concert that evening. This seemingly distant reality will depend upon vaccine rollouts continuing on schedule, an open-sourced digital verification system and, amazingly, the blockchain.
Several countries around the world have begun to prepare for what comes after vaccinations. Swaths of the population will be vaccinated before others, but that hasn't stopped industries decimated by the pandemic from pioneering ways to get some people back to work and play. One of the most promising efforts is the idea of a "vaccine passport," which would allow individuals to show proof that they've been vaccinated against COVID-19 in a way that could be verified by businesses to allow them to travel, work or relax in public without a great fear of spreading the virus.
Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.
Everything you need to know about the Jingdong Logistics IPO
JDL wants to ride China's ecommerce wave and become the integrated logistics firm to rule them all.
BEIJING, CHINA - NOVEMBER 11, 2020: A view of the Jingdong logistics centre in southern Beijing, one of the largest in Asia, with its automated sorting equipment capable of processing up to 800,000 packages per day, and customers waiting no longer than a day for their orders to arrive. Jingdong is the leading Chinese e-commerce platform.
David Wertime is Protocol's executive director. David is a widely cited China expert with twenty years' experience who has served as a Peace Corps Volunteer in China, founded and sold a media company, and worked in senior positions within multiple newsrooms. He also hosts POLITICO's China Watcher newsletter. After four years working on international deals for top law firms in New York and Hong Kong, David co-founded Tea Leaf Nation, a website that tracked Chinese social media, later selling it to the Washington Post Company. David then served as Senior Editor for China at Foreign Policy magazine, where he launched the first Chinese-language articles in the publication's history. Thereafter, he was Entrepreneur in Residence at the Lenfest Institute for Journalism, which owns the Philadelphia Inquirer. In 2019, David joined Protocol's parent company and in 2020, launched POLITICO's widely-read China Watcher. David is a Senior Fellow at the Foreign Policy Research Institute, a Research Associate at the University of Pennsylvania's Center for the Study of Contemporary China, a Member of the National Committee on U.S.-China Relations, and a Truman National Security fellow. He lives in San Francisco with his wife Diane and his puppy, Luna.
If Chinese ecommerce is a gold rush, Jingdong Logistics wants to sell everyone a pick and shovel.
That's the basic pitch behind an anticipated $5 billion IPO in Hong Kong that could value ecommerce giant JD.com's logistics arm at $40 billion, according to Bloomberg, making it the second most valuable third-party shipping company in China behind SF Express.
WHAT DOES JDL DO?
<p>As the name suggests, JDL is the shipping and delivery arm of JD.com, China's second-largest ecommerce company after Alibaba. JD, listed on Nasdaq, is currently valued at over $160 billion.</p><p>JDL is a spin-off that began as JD's in-house logistics department in 2007, with its operations consolidated into a wholly owned subsidiary in 2011. Since 2017, it's made its services available to other companies besides parent JD and is betting that "as supply chain demands become increasingly sophisticated, more companies are expected to outsource their supply chain operations to third parties that can provide comprehensive supply chain solutions and logistics services," according to its <a href="https://www1.hkexnews.hk/app/sehk/2021/103201/documents/sehk21021600660.pdf" target="_blank">offering prospectus.</a></p><p>JDL will be JD's third spinoff. JD Health <a href="https://www.cnbc.com/2020/12/03/jd-health-hong-kong-ipo-raises-3point5-billion.html" target="_blank" rel="noopener noreferrer">raised $3.5 billion</a> in a Hong Kong IPO in December 2020 and JD Digits, its finance unit, is planning an IPO in Shanghai, although it has been <a href="https://www.yicaiglobal.com/news/jdcom-fintech-arm-seeks-usd29-billion-via-star-market-ipo-" target="_blank" rel="noopener noreferrer">reorganizing itself</a> to avoid running afoul of regulators as Ant Financial did in the run-up to its planned public offering.</p><p>JDL says it has over 800 warehouses and employs over 240,000 workers in delivery, warehouse and customer service roles. Its stated goal: "To become the world's" — not just China's — "most trusted supply chain solutions and logistics services provider." It's already known for its logistics prowess; many items delivered via JD allow buyers to specify the precise hour of doorstep delivery, so investors are unlikely to need a hard sell.</p>WHAT'S NEXT FOR JDL
<p>JDL plans to use the proceeds of the offering to broaden its warehouse network and trick them out with more "smart" tech, strengthen its line-haul network, upgrade its cold-chain network to keep up with online demand for fresh foods and pharmaceuticals and bolster its cross-border network, partly because "demands from Chinese consumers for foreign products continue to remain robust."</p><p>JDL expects Chinese logistics spending to reach nearly $3 trillion by 2025, the highest in the world, partly due to "redundant logistics processes" that the company hopes to streamline. The integrated supply chain logistics market involves everything from express and last-mile delivery, to trucking and warehousing, to add-on services such as home installation and after-sale services, according to JDL. But it thinks that market is "highly fragmented" and sees a chance to become the logistics firm to rule them all.</p><p>Its secret weapon: tech. Its IPO prospectus mentions automated guided vehicles, autonomous mobile robots, sorting robots and self-driving vehicles, among other things, which will deliver "critical improvements in speed, accuracy and productivity in all key logistical operations." This includes a fully unmanned warehouse in Shanghai, already in operation. And the company will be guided by data to "gain a more comprehensive understanding of the sources of inefficiencies."</p>JDL's FINANCIALS
<p>JDL doesn't make a profit, but the trend lines are good. Revenue's rising quickly: It grew 31.6% between 2018 and 2019, from about $5.8 billion to about $7.7 billion. From 2019 to 2020, revenue for the first nine months of the year jumped 43.2%, from about $5.3 billion to about $7.6 billion. Net losses were about $340 million in 2019, and only $1.8 million over the first nine months of 2020.</p><p>The company has previously been criticized by both commentators and JD CEO Richard Liu for bleeding cash. Chinese financial outlet Caixin <a href="https://www.caixinglobal.com/2021-02-17/jd-logistics-files-prospectus-for-hong-kong-ipo-101663953.html" target="_blank">reported Wednesday</a> that Liu had "[written] in an internal email to [JD's] delivery leg in mid 2019 that the financing could only support JD Logistics' operation for two years if the company kept losing money." JDL's previous CEO, Wang Zhenhui, was ousted in December and replaced by Yu Rui, who had been the head of JD's Human Resources department.</p><p>JDL isn't promising a quick path to profitability, instead focusing on improving its competitive position. "Our costs and expenses will likely increase in the future as we expect to expand our logistics infrastructure, enhance our supply chain capabilities, develop and launch new solutions and service offerings, expand customer base in existing market and penetrate into new markets, and continue to invest and innovate in our technological platform," the prospectus says. "Any of these efforts may incur significant capital investment and operating expenses, and take time to achieve profitability." </p><p>But JDL spent only 2.9% of its revenue on research and development in the first nine months of 2020, down from 4% in 2018, suggesting JDL is far from a pure tech play.</p>WHAT COULD GO WRONG?
<p>A bet on JDL is a bet on China's continued economic growth, growing consumer demand, digitization of commerce and deepening penetration of broadband and mobile internet. If these trends reverse, JDL — and many other Chinese companies, not to mention the global economy — is in trouble.</p><p>JDL also flags its relationship with its parent as a possible concern. JD's the source of most of JDL's revenue – 56.6% in the first nine months of 2020, down from 61.6% in 2019 – and its ties with JD may prevent JDL from doing business with JD's direct competitors. What happens to JD and even CEO Richard Liu (刘强东) reputationally will also affect JDL. (One example: In August 2018, Liu was<a href="https://www.nytimes.com/2018/09/04/technology/jdcom-richard-liu-arrest-rape.html?module=inline" target="_blank"> arrested</a> on a rape allegation while on a business trip in Minnesota. Prosecutors declined to charge him, and he later<a href="https://www.nytimes.com/2019/12/13/business/liu-jingyao-interview-richard-liu.html" target="_blank" rel="noopener noreferrer"> faced a civil lawsuit</a> in a Minnesota court.)</p><p>Then there's the perpetual risk of intense competition. In the integrated logistics arena, this could come from the industry trend toward consolidation, which could mint new or bigger competitors than currently exist on the landscape. </p>WHO GETS RICH?
<p>Here's what we know from the prospectus:</p><ul><li>Post-IPO, JD will still own a controlling interest in JDL via two subsidiaries, so JD founder and CEO Liu, who ultimately owns more than 76% of JD, has the most to gain. </li><li>Cayman Islands-based Eastar Capital Fund, L.P. invested $360 million in a Series A round and owns 2.9% of outstanding shares.</li><li>Hillhouse Capital invested $360 million in a Series A round via a subsidiary and owns 2.9% of outstanding shares.</li></ul><p>As the Series A<a href="https://techcrunch.com/2018/02/13/jd-coms-logistics-business-raises-2-5b/" target="_blank" rel="noopener noreferrer"> reportedly valued</a> JDL at $13.5 billion, Eastar and Hillhouse stand to roughly triple their money upon the IPO.</p><p>Other investors include entities controlled by Tencent, Sequoia China and China Merchants Bank.</p>WHAT PEOPLE ARE SAYING
<ul><li><strong></strong><strong>"JD [Logistics] is the only company building an integrated, on-demand, digitized and increasingly autonomous logistics infrastructure at this scale,"</strong> Jeffrey Towson, professor of investment at Peking University's Guanghua School of Management in Beijing,<a href="https://www.scmp.com/tech/big-tech/article/3122045/jd-logistics-ipo-expands-e-commerce-empire-chinas-largest-retail" target="_blank"> told</a> the South China Morning Post on Thursday.</li><li><strong>"The problem is that JD Logistics is the only one still losing money among the publicly listed express delivery companies," </strong>Wu Lingwei wrote on WeChat account E-Commerce Online on Thursday.</li></ul>David Wertime is Protocol's executive director. David is a widely cited China expert with twenty years' experience who has served as a Peace Corps Volunteer in China, founded and sold a media company, and worked in senior positions within multiple newsrooms. He also hosts POLITICO's China Watcher newsletter. After four years working on international deals for top law firms in New York and Hong Kong, David co-founded Tea Leaf Nation, a website that tracked Chinese social media, later selling it to the Washington Post Company. David then served as Senior Editor for China at Foreign Policy magazine, where he launched the first Chinese-language articles in the publication's history. Thereafter, he was Entrepreneur in Residence at the Lenfest Institute for Journalism, which owns the Philadelphia Inquirer. In 2019, David joined Protocol's parent company and in 2020, launched POLITICO's widely-read China Watcher. David is a Senior Fellow at the Foreign Policy Research Institute, a Research Associate at the University of Pennsylvania's Center for the Study of Contemporary China, a Member of the National Committee on U.S.-China Relations, and a Truman National Security fellow. He lives in San Francisco with his wife Diane and his puppy, Luna.