Submitted by Jshbone12 t3_z8mj92 in wallstreetbets
Currently BABA is being audited by the PCAOB. This is to prevent delisting by making them compliant with SEC auditing standards. The audit results will come out in early December. In this post, I will explain why this audit is going to successful. Remember, if the audit is successful, BABA with rocket because delisting risks will be eliminated.
There’s a lot of fear mongering surrounding this issue, and those who’ve followed it the least are sometimes the culprits and sometimes the victims of fear and rumor.
Certainly no one can know for sure what the results will be, but every piece of evidence we have points to a positive outcome. While the SEC / PCAOB have certainly been tough in their language and one would assume rigorous in their performance, it seems they do WANT to play ball with China, and have been willing to make some allowances. Evidence for that is in what the PCAOB could have asked for and audited if they'd chosen to. By law, they could have audited the Chinese companies that recently delisted. It appears they chose not to, and that is telling.
What else tells me this could be successful? In brief:
-
The SEC/PCAOB used the word "completed" when finishing early. An ambiguous term, but not overtly negative.
-
A Chinese company called Atour applied to the SEC and was accepted for an IPO on the Nasdaq, within days of the PCAOB “completing” their audit in China. This is the first Chinese stock listed in the US to issue ADSs since DIDI went public on June 30,2021. (See link below) Are we to believe the SEC would have let that go through within weeks of announcing a failed audit? Unlikely.
-
Hong Kong is known for having highly rigorous auditing compared to the Nasdaq. In fact, some companies that can’t pass Hong Kong’s rigorous requirements, come to the Nasdaq instead. So if a company is dual-listed on the Hong Kong exchange (HSI) they’re likely good.
-
Every comment from named & unnamed sources within the PCAOB has been good.
-
The first sign of a failed audit will likely be a leak and a recent and unexplained drop of all Chinese stocks. That hasn’t happened.
In conclusion, this audit is largely about “compliance”, NOT perfect books or perfect process. If there are a few errors, but everyone has been compliant, from everything I’ve read, they’ll pass the audit.
If by chance they don’t pass the audit, by current law, I believe the Chinese companies would have one more year on the exchanges and therefore could have a second chance at an audit. NOTE: The PCAOB audits foreign countries listed on the US exchanges every year, regardless of the results. Think of it like an annual physical.
Before the audit is the best time to buy BABA. I’m currently holding over 1k shares. Position: https://imgur.com/a/pS7QQ8f
AutoModerator t1_iyc887y wrote
Our AI tracks our most intelligent users. After parsing your posts, we have concluded that you are within the 5th percentile of all WSB users.
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.