What's wrong with me being a rich man?

Chapter 112 Valuation

Many people have made the similar judgment that Fenton’s stock price will fall after noticing this incident.

The difference is how low it will fall.

That night, Jiang Nanchun, Shen Nanpeng, Xu Xin, Cao Guowei and others were concerned about the price of Fenzhong, and then they saw the tragic performance.

As the CEO who wanted to implement an MBO for Sina, Cao Guowei was also paying attention to the relevant situation in his office.

He watched silently for an hour, watching the screen steadily going down, and then he pinched his cigarette helplessly and gave a two-word evaluation: "Awesome!"

It's so arrogant!

The stock price fell to $8.58, a drop of 40%!

The market value evaporated by 5.7 million US dollars, which is 39 billion Chinese yuan in just one hour!

If based on yesterday’s closing price, the stock price would have been almost halved!

What can I say?

"Over the mountain..."

"Over the mountain..."

Cao Guowei muttered to himself, couldn't help but light another cigarette, and fell into deep thought.

In fact, after learning that the SEC was conducting a public investigation, he saw the detailed research report from Guo Shanfeng as soon as possible, and read the research methods and city cases presented by Guo Shanfeng before the opening of the market today.

Although Fenton Media has refuted it, who is telling the truth...

When Cao Guowei first learned about this, he was very disdainful and didn't believe the slander from any third-rate organization. But now, especially after seeing the number of screens in various areas of Pengcheng listed like mountains...

It was hard not to mentally lean over the mountain.

Similarly, the trends in the Nasdaq market also prove that everyone thinks so.

This thing is so easy to verify that there will probably be media on site to count it tomorrow. How will we refute it then?

Is this just an isolated case? Is this an isolated case in cities of Pengcheng's size? Then how do you charge customers in Pengcheng?

What the hell, just count them one by one?

How much hatred and resentment?
Are you still a high-end short-selling institution?

Cao Guowei shook his head helplessly. To be honest, the water that Guo Shanfeng had exposed was actually the core assets that were to be packaged and sold to Sina. Fortunately... the deal has not been completed yet.

Although the purpose is to introduce shareholders with stable control, such a large amount of assets is seriously inflated, which is equivalent to a bomb that may explode at any time!

If it wasn’t today, if it was exposed after Sina reached the deal…

As the CEO who strongly advocated this cooperation, Cao Guowei felt that he would most likely have to resign. At the very least, he would have to fire a few of his subordinates to quell the storm. However, Sina itself is relatively scattered, and he didn't know what kind of storm would arise by then.

Cao Guowei put out his cigarette again and cursed: "Fuck him!"

As soon as he finished speaking, the phone on the table lit up with an incoming call from Shen Nanpeng.

Cao Guowei twisted the cigarette butt vigorously before answering the phone.

"What happened with Fenzhong is too outrageous!" Shen Nanpeng took Sina's side as soon as the call came through. "Fortunately, the deal between Sina and Fenzhong was not reached, otherwise there would be trouble later!"

Cao Guowei hummed and said with a wry smile: "Our Sina stock price has also fallen."

Then, he said meaningfully: "This is really an unexpected disaster."

Although he is a director of Fenzhong, Cao Guowei is completely unaware of the specific business. Even if it is common sense to accept a little water, he cannot ignore such elements.

As for whether Shen Nanpeng on the other end of the phone knew about it...

"Regarding the stock price, Fenzhong is going to buy back the shares," Shen Nanpeng said tiredly. "The decline before today's closing will definitely narrow. What happens in the future actually depends on the overall performance."

Cao Guowei reiterated his position: "Well, Sina cannot continue. We will announce it after the sensitive period has passed. In addition, I will resign from the board of directors of Fenzhong when the time is right."

This is the limit of what he can do.

It also expresses dissatisfaction.

"Fenzhong's problems seem to be really big now, and they need to rectify their internal affairs." Shen Nanpeng commented and continued, "But Sina still needs to move forward. If this doesn't work, then just use the funds. Sina does need a more stable equity structure to facilitate long-term development."

Cao Guowei remained silent.

Shen Nanpeng gave himself stronger support: "Sequoia can provide funds. This week we will talk to FountainVest and CITIC about this matter and completely put an end to the turmoil that Sina has experienced in recent years."

Cao Guowei's mood eased a little, knowing that he had just skipped over Fenzhong's matter and needed to move on.

When he heard Shen Nanpeng say this, he knew that the other party already had a plan in mind, so he asked directly: "How much does my management need to pay?"

"Sina's major shareholder needs to hold at least 9% of the shares. According to the current share price, this operation needs to raise about 1.8 million US dollars." Shen Nanpeng said seriously, "Your management needs 30% of the funds. Our three private equity firms can serve as LPs to provide funds. In addition, we can also find other companies to provide loans, so that we can realize the MBO of Sina."

Cao Guowei silently calculated the value of the stocks he held.

"Your management should first sell off your shares, and discuss the MBO price of the new company internally. When the time comes to implement it, one share will become many shares." Shen Nanpeng advised, "In fact, everyone at Sina has been hoping to end the chaos over the years."

Simply put, the management team established a new company with three private equity firms, and Sina sold shares to the new company. The private equity firms only provided funds and sought capital returns, but did not participate in business management.

As for why this was not done before, it was because the sale of Fenzhong’s assets could be a win-win situation and the cost was low.

Cao Guowei thought for a long time and nodded: "Then let's meet again before the New Year and talk."

Shen Nanpeng breathed a sigh of relief and said, "Okay, we believe in Sina's future."

Such an MBO would require raising more funds, which cannot be completed in a short period of time and would require more work, but it could indeed take over Fenzhong’s failure.

"Sina will definitely rise again," Cao Guowei said bluntly, "and the money invested will be rewarded."

Business needs to be about returns.

The two chatted for a few more sentences, and just before hanging up the phone, Cao Guowei thought that Shen Nanpeng had a wide network of contacts and was well-informed, so he asked, "Who is that Guo Shanfeng?"

"I don't know." Shen Nanpeng was also quite distressed. "I don't know where it came from, but its research this time is very solid."

The only word that can be used to describe its down-to-earth research is solid.

Cao Guowei was a little confused: "Really? No news at all?"

"I can only say that its equity structure is very professional," Shen Nanpeng said. "I checked, but couldn't find anything. It took several detours, but it is basically confirmed that it is a domestic person. I don't know whether it is from Hong Kong or the mainland."

Cao Guowei asked: "Why? Is there any clue about the equity structure?"

"The equity structure will eventually be in Singapore," Shen said thoughtfully, "but if it is an American or European institution, they usually don't have to go through so much trouble."

Cao Guowei understood.

He hung up the phone and wanted to take another look at Fenton's stock price, but after hesitating for a moment, he decided to look at the final result from the news the next day.

There is no way to escape the tragedy of the Fenzhong people. According to Shen Nanpeng, they should try their best to avoid it being so tragic.

……

At six o'clock in the morning on January 1, Jiang Nanchun, the leader of Fenzhong, who had hardly slept all night, heard his cell phone ringing and answered it almost numbly.

"Hello, Mr. Jiang, I'm Fu Guozhang from Southern Metropolis Daily." The caller introduced himself as a reporter. "What do you want to say about the outside world's doubts?" Jiang Nanchun said, "Everything will be announced by the company. Thank you."

He hung up the phone and it didn't ring again for a while.

However, Jiang Nanchun couldn't fall asleep as he tossed and turned in bed.

Fintech's closing price yesterday was $8.437, down 41%!

This is even after the intraday decline narrowed. If it had not announced that it would repurchase shares, the decline would undoubtedly have exceeded 50%.

But this was just one day's trading. Including the pre-market decline, the company's stock price actually fell by 44.5%!

A message from the SEC, a research report from a short seller...

lost heavily!

Jiang Nanchun had an urge to change his name to Jiang Nanqiu. The sky was so high and the air was so dry that a fire almost reduced everything to ashes!

"Over the mountain, over the mountain!"

Jiang Nanchun gritted his teeth.

A moment later, the phone rang again, this time it was from Public Relations Director Ji Hairong, asking how to face the media today.

"Ask me everything. What do you do for a living?!" Jiang Nanchun shouted back.

Ji Hairong had to keep the bad news to himself, as his position was in jeopardy at this time.

But work still needs to be done...

Whether it is a personal phone or a company number, it has been ringing frequently from yesterday afternoon to today.

Ji Hairong only slept for three hours and had been preparing for how to face the media and the public. However...

When he received the news and knew that many reporters were counting the screens on the spot in Pengcheng at the first moment, he still felt a tremor in his heart!
The Pengcheng screen distribution announced by Guo Shanfeng is very detailed!
What’s more, it’s too late to add new ones overnight!

The reporters were literally reproducing the research they had done on the mountain...

Ji Hairong rubbed his face, feeling that the sharp knife of truth was cutting his own flesh, the company's flesh, and the boss's flesh...

This knife is so fast!
It hurts too much!!
……

——《Looking for the missing screen of Fenzhong Media! 》

——《Fenton’s share price plummeted, possibly involving financial fraud! 》

——《SEC launches public investigation into Fenzhong Media, well-known research institutions recommend selling Fenzhong shares! 》

The weather was very good in the morning. After jogging two laps, Yu Xing felt a little sweat on his forehead. He stopped and walked slowly, and searched for relevant information about the first dissection target on his mobile phone.

Everything else was fine, but when he saw the characterization from the "well-known organization" in the media, he couldn't help but laugh out loud.

Is it famous?
I definitely didn’t know it before, but I don’t know if it can be considered a little famous now.

Well, I just don’t know how to maintain my fame.

At 7:30, Yu Xing squatted downstairs of the company, drinking soy milk and calling Xiaoying.

"Hello? Yingza, are you up?"

Liu Wanying yawned, rubbed her eyes, and answered dazedly, "No."

"Open the door for me, I'm here to see you." Yu Xing said with a smile.

Liu Wanying suddenly came to her senses: "Nonsense, do you know where I live?"

"Either my left atrium or my right atrium." Yu Xing said with a smile, "Where else can I live?"

Liu Wanying commented: "Two atria, ready for two people to live in, right? Greasy!"

Yu Xing assured, “I’ll just be greasy with you, okay?”

"Boss Yu couldn't wait to call me this morning. It must not be for love." Liu Wanying pointed out the other party's purpose, "Are you impatient to know yesterday's profits?"

Yu Xing admitted: "Yeah, I just want to be successful in my career and stand in front of you in glory."

"That's enough, that's enough for today." Liu Wanying got out of bed barefoot and took two steps. "Yesterday, 1200 PUTs were exercised. The lowest price of Fenzhong yesterday was $7.8, but I didn't wait until that point and sold at $8.1. The profit of these 1200 PUTs is $22.8. The account now has $52.8."

The option premium for 1200 PUTs is $30, with a profit of $22.8.

Yu Xing hesitated slightly and said, "If I remember correctly, you plan to exercise 50% on the first day? And the remaining 50% later?"

"That's right. We don't know what the trend of Fenzhong will be tomorrow and next Monday, so let's lock in this part of the profit first." Liu Wanying said calmly, "In the next two trading days, if the price can fall to a lower level, the higher profits can be counted towards your share."

Yu Xing's capital was 15 US dollars, which was all the money he could use.

He calculated the principal this time and was surprised: "You invested in the angel round at Bai Xiaosheng, and your fund was trapped. How can you still pay $45 this time?"

Yu Xing originally thought that the amount of money Xiaoying invested this time was about the same as his own, or even more. A little over 20 US dollars would be a considerable amount, which is 136 million Chinese yuan.

Even though Liu Wanying had previously earned a good salary at Bain Consulting, she suffered a significant loss in income in the past few years after the financial crisis hit.

Liu Wanying smiled and said, "Leverage, I added a little bit of leverage, but we are still conservative overall this time. It was my first time shorting, and I was nervous when I chose to exercise the option yesterday."

Yu Xing was silent for a while: "Next time, use my money as well."

The PUT put option itself is leveraged, but... when you take stock of the profits and think about the money that Fenzhong lost in the stock market, the difference is indeed huge.

However, thinking about the fact that Muddy Waters only made a profit of $6000 on its first short sale, I felt balanced, as it was all accumulation from small to large.

"I can lose my money, I can take a chance, but do you still want to use your money to prepare for Bai Xiaosheng?" Liu Wanying advised, "The main reason is that the principal is too little. I hope I can have more next time."

"Tsk, I just feel that this is too little money, and I feel a little sorry for Jiang Nanchun." Yu Xing sighed, "I feel a little unfair for him."

Liu Wanying said: "Then I'll give you his phone number, you can call him and comfort him."

"Mr. Liu, should we talk before or after the New Year?" Yu Xing changed the topic directly. "This is making those people scream, but I found that the valuation growth of the company's financing is not weaker than our short selling."

"Principal, principal, and principal." Liu Wanying pondered, "After the new year, the valuation of your company..."

“The valuation must be higher than that of Capital Today, but we can sign a channel mechanism for a Series B exit.” Yu Xing emphasized, “Since the money is small and the shares to be sold are also small, we can calculate it in round numbers. One million US dollars is 100% of the shares, 10, 100, 10, it’s easy to calculate.”

Previously, the highest price paid by Today Capital and Sequoia was US$250 million for 30%, with the company's valuation at US$833 million.

Now it is 100% of the shares with 10 million US dollars, and the company is valued at 1000 million US dollars.

As less money comes in, the valuation is higher.

Liu Wanying smiled and said, "The price of your strong stance is that the company didn't get that much money. Are you still happy?"

"Happy!" Yu Xing had no regrets at all. "With this 100 million, we can raise more money in the B round. In addition, I see that the upper level has loosened its policy now. We will apply for a bank loan after the new year. Your investment will definitely be worth it!"

Liu Wanying pretended to be serious: "But I still need to think about it."

Yu Xing said stubbornly: "Either let me beg you, or let me beg Xu Xin, you should think about it carefully."

Liu Wanying was successfully amused: "Then let me be a third-rate investor who successfully snatched the project from Xu Xin."

(End of this chapter)