TikTok Backlash as Congress Heads for Vote to Force Sale
2 min
TikTok urged its users to call Congress and lawmakers to drop a bill that could ban the popular video-sharing app in the U.S., and those users listened.
But the plan backfired. Instead of dropping the bill, which was introduced just two days ago, the House Energy and Commerce Committee approved it in a 50-0 vote Thursday afternoon. House Majority Leader Steve Scalise said he’s bringing it to a floor vote.
That was after beleaguered house staffers across the Capitol grounds endured hours of office phones ringing off the hook in an all-out push from TikTok users.
While TikTok the company has criticised efforts to ban it or crack down on it, this week’s legislative move prompted the social media company to appeal directly to users.
“TikTok is at risk of being shut down in the U.S. Call your representative now,” the app told its users when they logged into their accounts.
The app asked users to enter their ZIP codes and then directed them to their local congressional representatives.
TikTok was responding to a measure proposed Tuesday by Reps. Mike Gallagher (R, Wisc.) and Raja Krishnamoorthi (D, Ill.), co-chairs of the House Select Committee on the Chinese Communist Party, that claims TikTok “poses a grave threat to U.S. national security.”
TikTok, based in Singapore, is owned by China-based ByteDance, and that’s what lawmakers object to. The measure focuses on “foreign adversary controlled applications.” It would require ByteDance to divest of TikTok about five months after the law is passed, or risk being removed from app stores in the U.S.
That would make it illegal to distribute TikTok through any U.S. app store or from any U.S. web-hosting platform. TikTok says that is effectively a ban of the platform.
A TikTok spokesperson told Barron’s that “This legislation has a predetermined outcome: a total ban of TikTok in the United States.”
“The government is attempting to strip 170 million Americans of their Constitutional right to free expression,” spokesperson Alex Haurek said. “This will damage millions of businesses, deny artists an audience, and destroy the livelihoods of countless creators across the country.”
TikTok CEO Shou Zi Chew and others have repeatedly insisted that ByteDance and TikTok aren’t controlled by the Chinese government or Chinese Communist Party, and that U.S. user data is stored securely in Singapore and the U.S.
Krishnamoorthi said on X that TikTok has “launched a massive propaganda campaign, requiring users to call their representatives, and falsely labelling our legislation a ‘total ban’ of TikTok.”
“Phones are completely bogged down hearing from students, young adults, adults, and business owners who are all concerned at the option of losing their access to the platform,” a Republican aide told Axios.
The National Security Council has called the bill “an important and welcome step” to addressing risks to sensitive U.S. data, and the White House has said that if Congress passes it, President Joe Biden would sign it.
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Shares in Elon Musk’s rocket maker are set to begin trading at midday Friday.
4 min
Elon Musk’s SpaceX is set to make its stock-market debut Friday in the largest IPO ever—and perhaps the most closely watched. The company sold an outsized portion of the offering to individuals. Its performance on Friday will be a crucial gauge of investor appetite for mega-offerings from OpenAI and Anthropic expected later this year.
The rocket maker, which derives most of its revenue from its satellite internet unit and has a nascent artificial-intelligence business, will trade under the ticker “SPCX.” It sold 555.6 million shares at $135 each, raising about $75 billion in a deal that valued the company at roughly $1.77 trillion.
When will shares open for trading?
SpaceX executives are set to ring the Nasdaq’s opening bell in New York, but shares in buzzy initial public offerings don’t tend to start trading until later in the day.
Bankers leading an IPO typically want to match buyers and sellers for about 10% of the shares sold before opening trading to lessen volatility. For SpaceX, that would be about 55 million shares, or roughly $7.5 billion worth.
Because pre-IPO investors are restricted from selling shares for a while, it can take time to find willing sellers among those who bought shares in a high-demand IPO.
Shares of Alibaba , the largest U.S. IPO until SpaceX, opened for trading a little before noon in its 2014 offering. Last year, one of the highest-profile offerings was that of software maker Figma , whose shares started trading just before 2 p.m.
It is possible that SpaceX’s bankers will decide to start trading without matching the typical portion of orders to ensure the shares have several hours of trading on their first day, people familiar with the matter say.
How volatile will the stock be?
Bankers and traders expect SpaceX’s share price could be volatile in initial trading, thanks in part to the large portion of its shares expected to be held by individual investors. Some who anticipate individuals will rush into the shares worry they could just as easily get spooked and rush out.
Any sharp movement in stock price could trigger so-called circuit breakers that could pause trading. For most newly listed companies, a 10% swing in either direction prompts a five-minute pause. Companies that had their shares halted include Figma and Cerebras Systems , the chip company whose shares soared in its May debut.
These forced timeouts applied to single stocks came after the so-called flash crash in 2010, when the Dow Jones Industrial Average fell 700 points in eight minutes before recouping much of the loss.
What is all the talk about the ‘green-shoe’ option?
If the stock starts trading erratically, bankers have a secret weapon to attempt to calm things down.
Underwriters typically sell more shares to investors than an IPO’s total offer size, colloquially called the green shoe. In SpaceX’s case, they sold about 15% more shares than the stated offering size.
Because this means they technically allocated more than the offering amount, the so-called stabilisation agent, in this case, Morgan Stanley , needs to buy back the excess number of shares to deliver them. If the stock starts to fall, the bank will buy the shares in the open market, which helps buoy the stock price. If the stock isn’t faltering, the stabilisation agent can buy the additional shares they need to deliver to investors directly from the company.
The term “green shoe” comes from the first company to employ a version of this method years ago, a shoemaker that was a predecessor to Stride Rite. When Meta Platforms , then known as Facebook, went public in 2012, its shares started dropping and its bankers stepped in to buy more shares.
How will Elon Musk’s take-it-or-leave-it pricing fare?
Like all things Musk, SpaceX’s IPO bucked the norms. Instead of approaching prospective investors with a possible price range for shares ahead of the IPO and incorporating their feedback, the company set an exact share price from the beginning: $135.
The idea was to limit drama for what is already the biggest IPO of all time. It did, however, remove what many see as an important step along the way: price discovery. The success of this approach will partly be judged by how SpaceX’s shares trade Friday. If the stock surges, critics will say SpaceX left money on the table by not pricing shares higher. If the stock falls or trades flat, there will likely be critiques that SpaceX and its advisers overestimated demand.
Will the machinery hold up—and what will be the wider market impact?
The sheer size of SpaceX’s IPO will test the trading infrastructure at Nasdaq and could have ripple effects in the broader market.
Nasdaq has practiced with mock openings to make sure its trading platform is prepared. When Facebook went public, some investors who tried to change or cancel orders ahead of trading didn’t get confirmations because of a technology malfunction. The confusion contributed to Facebook shares dropping on the first day of trading. They didn’t return back above their IPO price for more than a year.
Meanwhile, some market watchers expect added activity Friday in stocks that individual investors might sell to buy SpaceX shares, such as those of technology companies and Musk’s electric-car maker Tesla . Such sales already appeared to be under way earlier in the week, when individual investors dumped single-stock holdings on a net basis for two days in a row, according to Vanda Research. (To be sure, those sales came on days that were poor showings for tech stocks broadly.)
It will take several days for SpaceX shares to show up in any major index funds , so the offering’s wider impact on the market could play out over the next several weeks or longer.
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