By Niket Nishant
Oct 7 (Reuters) – Shares of Webull dropped to a near-four-month low on Wednesday after a US congressional panel said the online trading platform was “tied in structural ways” to the Chinese government, prompting a strong rebuke from the company.
The bipartisan House Select Committee on China said in a report released on Wednesday that it found “a profound gap” between the company’s public marketing and actual control, sending Webull’s shares plummeting 19.1%.
The findings underscore growing scrutiny of Chinese links to companies operating in key areas of the US economy, including financial services.
“Webull has made every effort to cooperate with the Committee, but did not hear from them for more than 20 months before this report was released,” a company spokesperson said.
“It is deeply disappointing that the Select Committee published a report containing significant inaccuracies and unsupported conclusions without ever seeking clarification from Webull,” the spokesperson added, noting that the company stores US customer data in the US.
CNBC first reported the details of the congressional panel’s report earlier on Wednesday.
“Using technology providers in mainland China and an opaque China-linked ownership structure, Webull exposes its data to our foremost adversary. Investors should heed this information when choosing who they do business with,” said John Moolenaar, who is leading the committee with Ro Khanna.
Analysts at Scotiabank said the near-term question is whether the findings prompt executive agencies or financial regulators to initiate or broaden their own reviews.
“For now, the report will weigh on valuation rather than actual financial results,” the brokerage said.
A TENSE RELATIONSHIP
While the US and China have been under a tariff truce for about a year, tensions remain. Last week, Congressman Ro Khanna, a Democrat, warned that Beijing could steal AI model weights developed by OpenAI, Anthropic and other top US firms, erasing the US edge over China.
“I want to emphasize that protectionism does not make the US more competitive. China firmly opposes the US overstretching the concept of national security,” a spokesperson for the Chinese embassy in the US said in an emailed statement to Reuters.
Chinese President Xi Jinping has also described the relationship between the two superpowers through the “Thucydides Trap,” a theory that competition between a rising power and an established one tends to lead to war.
US President Donald Trump’s lavish three-day summit last month for President Xi delivered no breakthroughs on thorny issues such as AI, trade, Taiwan and the war with Iran.
“The potential regulatory and operational implications of these findings create a level of uncertainty that we cannot reasonably incorporate into our estimates,” Siebert Financial analyst Brian Vieten said, while suspending his buy rating and price target on Webull’s stock.
(Reporting by Niket Nishant and Manya Saini in Bengaluru; Additional reporting by Pragyan Kalita; Editing by Shinjini Ganguli and Diti Pujara)
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