Matthew Sigel
Head of Digital Assets Research at VanEck, Portfolio Manager of NODE ETF
Webull faces a national-security overhang from its China ties. Per CNBC, citing House congressional panel findings, Webull's China ties are a national security risk, and the stock dropped 10%. The core problem is that Webull controls $25B of customer assets and allegedly routes retail data through a mainland development team. The CEO has sold 200k shares since late August, and other insiders have also been selling. x.com x.comÂ
Webull's ties to China are a liability, as warned earlier. Per a quoted post, the stock fell nearly 30% after a House panel flagged those ties as a national security risk and raised concerns about US investor data. x.comÂ
Webull faces a serious blow from the news of a China national security risk tied to it. x.com x.comÂ
Webull looks bullish into its August 19 earnings, with whales positioned for good results. Its AI push turns the platform into an active decision partner that researches securities, analyzes portfolios and gives personalized real-time guidance. Q1 equity volume more than doubled to $261B, and customer assets rose 90% to $24B on 91% net-deposit growth. Technically it sits on its 20/50 EMA and volume shelf, with a strong chance to retest the 200 EMA and more. x.comÂ
Webull's historical ties to China make it one to avoid; per another investor's post, its Cayman Islands-incorporated parent has faced scrutiny over those ties. x.comÂ
Webull still looks too bubbly on valuation compared with other fintechs, even though it is a good broker. x.comÂ
Webull looks cheap against its sales at $9.48. It trades at 3x sales, while software companies usually get 9x. Applying 9x to next year's sales, give or take 12%, gives a fair range of $18.01 to $22.92, leaving the stock 47% under the low end. This is a levels-only read off reported earnings and revenue estimates, with no fundamental work. x.comÂ
Webull is a pass despite being a decent brokerage at a fairly decent valuation, because its leadership is mediocre. x.comÂ
Futu and UP Fintech's Tiger Brokers face what should be unprecedented penalties that strip their onshore gains and clear out illegal existing business in mainland China. Regulators will confiscate all illegal gains of the onshore entities of Tiger, Futu and Longbridge and set a two-year concentrated rectification period to clear out illegal existing business. Neither is one to buy on the news. x.com x.comÂ
Webull's strong second-quarter report has triggered another Stage 2 breakout in the stock. Adjusted EPS came in at $0.12 against a $0.03 estimate, and sales of $198.8 million beat the $181.3 million expected. x.com x.comÂ
Futu shows the regulatory risk of investing in China, which is why Sea and Grab, with little China exposure, are preferable. Futu fell 40% on a Chinese government investigation. Such episodes usually look scarier than they turn out, and Futu has been dealing with Beijing since 2021, so investors should not be surprised; the key is limiting exposure. x.com x.comÂ
