From the first days of China’s Internet, one of the biggest gripes of China’s tech entrepreneurs has been that Western investors just don’t understand them. Sohu.com founder Charles Zhang, one of China’s tech pioneers, launched into an epic rant on that subject when I interviewed him in 2006 for one of Fortune’s earliest stories about life behind “The Great Firewall of China.” “I have to deal with a bunch of investors who don’t live in China, can’t speak the language, and don’t even look at my site,” Zhang fumed. “All they want to talk about is the next quarterly earnings statement or how to replicate some business model from the U.S.”
Eleven years on, that remains a common lament among China’s tech founders. And maybe they have a point. Consider Wall Street’s reaction last Thursday to quarterly financial results announced by Alibaba (baba). The Chinese e-commerce giant reported that, in the three months ending in March 31, it raked in $1.55 billion in net income—nearly double net income in the same quarter last year. Good news, right? Well, global investors weren’t impressed. Alibaba’s shares tanked more than 5% in morning trading. Why? Apparently because the company’s 64 cent earnings-per-share ratio missed analysts’ expectations. By a penny.
BABA’s share price recovered later in the day as it dawned on folks that maybe it didn’t matter if net income lagged a little. The company is investing in data storage, entertainment and other areas expected drive future growth. Markets also were mollified by the fact that revenue for the quarter shot to $5.6 billion, up 60% (!) year-on-year. (Alibaba’s “disappointing” net income for the January to March quarter was double that of Amazon for the same period, and the Chinese company’s revenue grew nearly three times faster than Amazon’s.)
Since January, Alibaba’s share price is up almost 40%, and now trades at about $123, restoring Jack Ma to his position as China’s richest man. But you can see why maybe Jack and his co-founders might sympathize with Rodney Dangerfield.
Last Thursday’s morning sell-off was only the latest tiff in Alibaba’s long-running love-hate relationship with global investors. Jack has made no secret of his disdain for the Anglo-American idea that shareholders know best, most famously in 2009 when he declared: “Let the Wall Street investors curse us if they wish.” In 2014, he and co-founder Joseph Tsai aborted plans to list on Hong Kong’s stock exchange because regulators balked at changing Hong Kong’s rules to allow Alibaba’s founders to retain control a majority of the seats on the board.
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Instead Jack and Joe took Alibaba’s IPO to the New York Stock Exchange, which was happy to bless their proposal. Alibaba’s September 2014 on the NYSE earned $25 billion, and remains the world’s biggest IPO. But the honeymoon was brief. BABA’s share price debuted at $68, surged to a high of $120 in November, then tumbled into a year-long slump, weighed down by concerns Beijing would crack down on Alibaba for trafficking counterfeit merchandise and the faltering growth of China’s economy. A September 2015 cover story in Barron’s assailed Alibaba for cooking its books, faulted management for embarking on a reckless acquisitions spree, and predicted Alibaba’s stock, then trading at about $64, could fall another 50%. China bear Jim Chanos piled on, attacking Alibaba’s accounting as “some of the most questionable I’ve ever seen.”
No surprise, then, that when it came time to float shares of Ant Financial Services Group, his online financial services powerhouse, Jack didn’t rush back to Wall Street. This time, he opted to list on China’s domestic stock markets, where transparency requirements are far less onerous and investors far less demanding.
Ant’s IPO has been among the world’s most anticipated listing deals. The company provides the technology that enables customers on Alibaba’s e-commerce sites to make purchases, and operates Yu’e Bao, a money-market fund that has become the world’s largest. It also runs an online bank, MYbank. In its last financing round in April 2016, Ant was valued at $60 billion, double the value of Snap. The IPO was widely expected to happen later this year.
Alas, China’s capital markets have other trade-offs. A report this week the Financial Times says Ant’s China IPO has been postponed until the end of next year at least. The FT says Ant’s IPO is stuck pending crucial regulatory decisions, which no one wants to take responsibility for in a year when China’s ruling Communist Party is choosing its next generation of leaders. Continued turmoil in China’s stock and credit markets doesn’t help.
For now, to fund Ant, Jack has snubbed both Sand Hill Road and Wall Street in favor of state-controlled financial institutions from China, among them China’s giant sovereign wealth fund, China Investments Corp. Ant may have to wait a while longer for an IPO. But with homegrown backers that big, Jack can afford to wait–and to let Wall Street investors curse as loudly as they like.