Chapter 920: Crazy Cashing Out
After Lin Weimin and Zhang Chaoyang finished discussing the Internet Conference, both sides began preparing for the event.
Both parties will play to their respective strengths, with Guowen Group responsible for connecting with the government and American guests, and Sohu responsible for connecting with many domestic Internet companies.
In just a few days, a piece of gossip spread throughout the domestic Internet industry.
Sohu is planning to hold a national Internet conference.
This news quickly attracted the attention of major domestic Internet companies and practitioners.
As the first domestic Internet company to be listed on NASDAQ, Sohu's position in the domestic Internet industry is unquestionable.
But it suddenly did this, and many of its peers felt that it was not a good intention.
Sohu's market value is now approaching 10 billion US dollars. It seems that it is on its way to unify the martial arts world and become the leader!
It is said that competitors are enemies, and the Internet industry is no exception.
Sohu became the first domestic Internet company to be listed on NASDAQ, and now it is planning to hold an Internet conference. Many people are dissatisfied with this, and Sina is the first one to express its dissatisfaction.
At that time, Solitaire was the first software company in China to receive huge venture capital from overseas companies. It later developed website business and ran it successfully. It then merged with Huayuan Information, which was very popular at the time, to form Sina, which became very popular at the time.
If Sohu had not had the support of Guowen Group and had not been one step ahead, it would be hard to say who would win the title of China's No. 1 Internet stock.
Because Sina had been studying the possibility of going public as early as 1998 when it was just merged. However, due to the serious dispersion of equity within Sina and the fact that overseas capital had overwhelmed the founders, they had to face a problem if they wanted to go public, which was to use the VIE structure to reasonably and legally obtain control of the company.
As a result, Sina's listing was repeatedly delayed.
But as of March this year, Sina's road to listing was finally completed, and they even started the pre-listing roadshow.
In Sina's eyes, Sohu, the first Chinese Internet stock, was just a fluke. If their listing process had not been delayed by their equity structure, how could Sohu have been able to take the lead?
In fact, not only Sina, but also NetEase, a rising star in the portal industry, is planning to go public. The three major domestic portals have all gone to NASDAQ.
So when Sohu contacted them and said they wanted to hold an Internet conference, Sina was not interested at all, and they had no time to pay attention. The company was about to go public, so who had the time to attend an Internet conference?
The wave of US interest rate hikes from 1999 to 2000 was one of the triggers for the Nasdaq stock market crash in 2000, but people and the market today are unaware of this.
In fact, the signs had already appeared since the fourth quarter of 1999, when many Internet companies listed on NASDAQ frequently reported losses.
But at this time, the market and investors have long been accustomed to the losses of Internet companies and have summed up a set of skilled rhetoric.
Losses prove that a company is growing rapidly, and losses represent the future potential of a business.
If they turn a blind eye to the brewing crisis, they will inevitably suffer backlash.
March 10th should have been an ordinary Friday. People were planning their leisure time for the coming weekend. The Nasdaq Composite Index hit an all-time high of 5133 points and closed at 5049 points.
The market is hot and the carnival is still going on. Sina is conducting their roadshow before listing, and Sohu's shareholders are still regretting the stock price hitting a new high and are thinking about whether to buy back a wave of stocks.
On Sunday, Warren Buffett, the stock god, said in an interview with reporters that investors and institutions in the U.S. stock market are overly optimistic and that the stock market may see a correction in the future, but no one took his words to heart.
Two days later, on a brand new Monday, the Nasdaq opened with a fall. The share prices of emerging companies in the US technology and Internet industries, led by Dell and Amazon, suddenly fell collectively, triggering a chain of selling in the next few days.
Many investors, funds and institutions who sensed that something was wrong liquidated their positions and fled. The originally hot market took a sharp turn for the worse in a blink of an eye, ushering in an epic decline.
In just three days, the Nasdaq index plummeted to 4,582 points, a drop of more than 10%, causing heavy losses to countless investors and institutions.
On March 16, the Nasdaq index, which had fallen for three consecutive days, rebounded at the opening. Many investors were delighted, thinking that the market adjustment period was over.
The Nasdaq rose and fell in the following days, but eventually continued to rise.
Until March 28, the three major U.S. indexes fell across the board, with the Nasdaq Composite Index falling 2.5%, once again entering a diving mode and continuing to plummet.
The collapse of Nasdaq happened on the other side of the ocean and had no impact on the lives and work of ordinary Chinese people, but it had a huge impact on two Chinese companies that were about to go public.
The period when Nasdaq was plummeting was the time when Sina was preparing for its roadshow and listing. As of April 13, the day Sina went public, the Nasdaq index had fallen by 35%.
Fortunately, the market still has expectations for Chinese Internet companies in emerging markets. Sina's stock issue price was priced at US$17 million, rose to US$22 million at the opening, and closed at US$20 million on the same day, becoming one of the few bright spots in the Nasdaq, which has been falling for nearly a month.
Sina, which successfully went public, did not feel the slightest bit of joy. In the following days, its stock price even fell below the issue price, which made them deeply feel the arrival of the cold winter of Internet capital. Sohu and Zhang Chaoyang also felt the same way as Sina.
After a month of plunging Nasdaq, Sohu's stock price was nearly halved, falling from a peak of $142 million to $74 million. Zhang Chaoyang was almost numb from the fall and even had no time to attend the Internet conference that he had been enthusiastic about some time ago.
After enduring for more than twenty days, he finally couldn't bear it anymore and ran to Lin Weimin to seek comfort.
"Did you know that the stock market was going to crash?"
Zhang Chaoyang no longer had the high spirits he had more than a month ago, and he looked a little decadent.
The company's stock price and market value were halved in just one month, and he is now exhausted.
Seeing that Lin Weimin did not answer his question, Zhang Chaoyang smiled self-deprecatingly, "I have been really confused recently. The collapse of Nasdaq came too suddenly, and no one was mentally prepared at all."
"If we were prepared, wouldn't it have collapsed long ago?" Lin Weimin said lightly, "There were enough signs before, it's just that the market was too hot, so everyone huddled together for warmth and created an illusion."
Zhang Chaoyang looked depressed and said, "I should have sold more stocks earlier."
Lin Weimin smiled and said, "It's not too late to sell it now."
This made Zhang Chaoyang feel miserable. "Do you mean it will continue to fall?"
"You can check the historical records yourself and you will know. This time, the three major U.S. stock indexes all fell, with the Nasdaq suffering the most. It is comparable to the famous stock market crashes in history."
Zhang Chaoyang still held on to some hope, "It's been falling for a month, maybe it will go up?"
"Of course it's possible, it's just a matter of probability."
Zhang Chaoyang sighed. With the market so pessimistic, how could he not understand how low the probability was?
"You have a good vision and can judge the situation. Guowen Group has won a great victory this time."
"If you want to win a great victory, you should sell all your stocks, or mortgage the remaining stocks and cheat the Americans."
For four consecutive months, Guowen Group has not stopped selling stocks. By the end of March, the group only held 3.25% of Sohu shares. At this time, Sohu's stock price had fallen by 40% compared to its peak, and was still falling.
At this time, Guowen Group stopped selling its stocks, which made people think that they believed Sohu's stock price had bottomed out and did not want to continue selling at a loss. This was of course done intentionally by Lin Weimin.
Not only Sohu's stock, but also all of Lin Weimin's own investments in the United States, follow this rule.
He never cashes out at the highest point, nor does he liquidate his positions violently.
Don't try to earn the last penny.
It is precisely because of this kind of cautiousness that he has been able to make a fortune quietly for so many years without ever making any mistakes.
Zhang Chaoyang smiled bitterly and said, "I don't know about the institutions and investors in the United States who were involved in the collapse of Nasdaq, but if the gains of Guowen Group were to be made known, it would definitely make countless people envious."
Lin Weimin smiled but said nothing.
"The group has made at least 400 to 500 million this time, right? How do you plan to spend the money?" Zhang Chaoyang asked curiously.
Four consecutive months of stock selling also brought huge profits to Guowen Group.
In a crazy market, there is no need for the shipment volume to be too large to cause a market crash. No matter how much they ship, there will always be someone to take over.
It was not until late March that the stock prices sold by Guowen Group began to fall, but this was a deliberate act, as the number of stocks sold during this period was not large.
Overall, the stock reduction plan that started in November last year and lasted for more than four months eventually brought Guowen Group a revenue of 669 million US dollars, which is more than 5.5 billion yuan when converted into RMB.
But Guowen Group will certainly not transfer all the money back to China. To do so, it would first have to pay taxes to both countries. Even if there is a tax preferential agreement between China and the United States, it would not be cost-effective.
Therefore, Guowen Group only transferred 200 million US dollars of profits back to China. After deducting the taxes between the two countries, there was still 1.34 billion yuan left in Guowen Group's account.
The remaining money remains in the United States.
The Nasdaq's rapid decline has only just begun. It will continue to fall in the next two years. It would be unreasonable not to buy at the bottom at this time.
"One part is kept abroad, waiting for the opportunity to buy at the bottom. Another part has been transferred to China. This money is investment income, and will continue to be invested in domestic enterprises in the future."
Lin Weimin did not hide anything from Zhang Chaoyang, but spoke frankly about it. This kind of thing is not difficult to guess.
Zhang Chaoyang nodded and said, "One inside and one outside, safe and reliable. With the Nasdaq crash, it may be difficult for domestic Internet companies to raise funds in the future. This is the right time."
As he said this, a cunning smile appeared on his face.
Lin Weimin was immediately displeased. “Don’t make it sound like we’re taking advantage of someone’s misfortune. We’re also providing momentum for the company’s development.”
Zhang Chaoyang nodded quickly, "That's right."
No wonder Teacher Lin can be a leader, look at his language skills.
But after saying this, Zhang Chaoyang felt that his thinking was also opened up.
Sohu's stock price soared before, and he cashed out 100 million US dollars. Now Sohu is not short of money, and it can also invest in some potential companies in the domestic Internet industry in the future.
In the past, he was the one who went to people’s homes to ask for help, and this time he also wanted to have a taste of being asked for help.
Thinking this in his heart, Zhang Chaoyang became proud.
"I'll find some potential companies to invest in tomorrow."
Hearing this, Lin Weimin glanced at Zhang Chaoyang and couldn't help but think of Qu Xiaowei who said some time ago that he wanted to invest in stocks.
As a man who once rejected the entire Chinese Internet, Zhang Chaoyang's words really made Lin Weimin not know how to continue.
You have no idea at all!
(End of this chapter)
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