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Chapter 505, page 0493: [The US Debt Crisis Is Coming]

The final results of the "Oracle Era" National City Championship are as follows: the champion and runner-up are Beijing Polka Dot Internet Cafe and Shanghai Netfish Internet Cafe, respectively.

Nine out of the ten main players on both teams are actually professional players posing as players.

Quite a few acquaintances were there, including Wu Wukai and Xiaoxiao, who were on the Wangyu Internet Cafe team. Perhaps due to a lack of synergy with their temporary teammates, they were utterly crushed in the finals.

Chen Guiliang personally presented the award to the champion team, and the checkboard printed with the number 200 million made everyone envious.

After the match, Principal Wang appeared at the newly renamed IG club.

He gathered all the players together: "Youke is going to hold a national professional league for Oracle Era, and I plan to establish a new Oracle Era team. Those who are interested can sign up first, and then we will conduct internal selections."

Xiaoxiao immediately raised her hand: "I want to play 'Oracle Era'!"

Principal Wang glanced at him: "Don't you play League of Legends? And you just won the TGA King of Glory Championship last month."

Xiaoxiao said, "I used to play 'Future Era,' which is also a game by Youke. I have an emotional attachment to Youke. Moreover, I personally signed up to participate in the competition, and this time I helped Wangyu Internet Cafe win the runner-up in the 'Oracle Era' National City Championship. I believe I have a talent for playing 'Oracle Era.'"

Principal Wang said speechlessly, "Since you won the TGA championship, you'll represent the Chinese region of League of Legends at the WCG Global Finals. If you switch to playing Future Era, who will replace you in League of Legends?"

"I...I can play both games at the same time!" Xiaoxiao said stubbornly.

Wu Wukai raised his hand and said, "I also want to switch to 'The Oracle Era'."

Luffy, Tabe, and other League of Legends players also looked at Principal Wang with anticipation. Clearly, they all wanted to switch games.

Although they are this year's League of Legends champions, the game's popularity has declined too quickly, and it's obvious to everyone that continuing to play is a dead end.

Moreover, I've heard that the situation is even worse in the European server, where the daily peak concurrent players for League of Legends have dropped to less than 5.

Hmm... 5 peak users is quite impressive, considering that Warcraft 3 has less than 2 users.

But Warcraft 3 has a huge influence, which can make players famous quickly. League of Legends, on the other hand, has virtually no influence.

Especially in China, the daily peak of LOL players has fallen below 25.

This data seems impressive, but it's the result of QQ's continuous user acquisition efforts. Compared to the peak of 30 six months ago and 50 last year, even a fool could see that this game was doomed.

And what about "The Oracle Era"?

The daily peak in China has exceeded 180 million, and the daily peak in Europe has exceeded 20.

The fact that the owner of Youke is willing to spend a lot of money on competitions shows that this game has more potential.
Principal Wang thought for a moment and said, "It's voluntary."

……

Chen Guiliang flew back to Beijing, his gaze now fixed on the United States.

During the finals of the "Oracle Era" city battle tournament, the United States raised its debt ceiling.

Three days later, Standard & Poor's downgraded the United States' long-term sovereign credit rating to AA+. This marked the first time the United States had lost its AAA rating, and the US debt crisis erupted, quickly spreading to global financial markets.

Chinese concept stocks have exploded again!

From last year to April this year, it was a period of frenzy for Chinese concept stocks, with the iMeigu Chinese Concept Index rising by 48.7% in one year.

Jack Ma's Alipay incident caused a collective plunge in Chinese concept stocks in May.

Just when things were finally starting to recover, the US debt crisis hit. Muddy Waters and other institutions are reiterating the risks of VIE agreements and collectively predicting a downturn in Chinese concept stocks, causing a sharp drop in the share prices of Chinese companies.

The next few months will be absolutely hellish for Chinese companies listed in the US.

一共有28家中概股从美国退市，92家中概股跌到低于2美元，43家中概股跌至1美元以下。

Regardless of the complexity of the specific reasons, countless CEOs of Chinese listed companies are secretly cursing Ma Jieke's ancestors. This is because short-selling institutions are focusing their attacks on Chinese concept stocks precisely on the VIE risks exposed by Ma Jieke's illegal operations!

The entire month of August was filled with lamentations.

Baidu, the top-performing Chinese stock in the US, plummeted 12% in a single day and fell by about 20% in a single month.

Chen Guiliang's ByteDance stock plummeted 15% in a single day and fell by about 18% in a single month.

This was because it coincided with the release of the second-quarter financial reports. After several days of sharp declines in stock prices, the positive earnings reports led to a rebound in the stock prices of Baidu and ByteDance. Therefore, the monthly decline was not as severe.

Sohu's situation was similar. Its second-quarter financial report was very strong, with both revenue and net profit increasing by 36% year-on-year. However, its stock price plummeted by 12.16% in a single day due to the US debt crisis, and only recovered after several days of continuous decline.

Zhang Chaoyang couldn't help but post on Weibo to complain: "Wall Street is blind, collectively deaf!"

Everyone is reacting quickly.

New Oriental opted for a stock split to attract more small and medium-sized investors and enhance stock liquidity by lowering the price per share.

Giant Interactive opted for a cash dividend of $3 per share, totaling approximately $7 million. This simple and direct approach proved effective, causing Giant's stock price to surge by 8%.

NetEase is the most bizarre of all!

NetEase's stock price has been undervalued because it hasn't been telling a compelling story for a long time.

This time, NetEase did nothing but release its financial report, yet its stock price never fell, and even rose by 5% on the day the US debt crisis broke out. "Mr. Chen, when would you be available to participate in the video board meeting?" Wang Wei called personally.

Chen Guiliang said, "Anytime within the next week is fine."

Wang Wei said, "How about we set the meeting at 9 a.m. two days from now? That would be convenient for shareholders from both China and the United States to hold the meeting."

“Okay,” Chen Guiliang said.

Tudou.com is in a terrible state right now!
Its offering price was $29, but due to the problems caused by Wang Wei, Tudou.com's stock price immediately fell below the offering price upon listing. In May, affected by the Alipay incident, the stock price continued to decline, and now it is facing the US debt crisis.

Tudou.com's stock price has now fallen to $6.26 and is still declining.

It simply couldn't be stopped because the financial reports were so terrible.

Tudou.com reported a net loss of $1200 million in its recently released second-quarter financial report. Furthermore, its business growth has slowed, and its website performance has gradually fallen behind Youku.

Another issue is the founding team's extremely low shareholding; prior to its IPO, over 85% of the shares were held by investors. The founders could be ousted at any time.

Two days later, the video board meeting was held.

In addition to Chen Guiliang and Wang Wei, seven other directors attended the meeting.

Ji-Hsun Fu, representative of GGV Capital, spoke first, saying, "Everyone knows the current situation; there's no way to salvage the stock price. I've had initial contact with Li Shimo, representative of Youku's major shareholder, 'Weicheng Fund.' If the conditions are right, Tudou might be able to merge into Youku."

Li Yongjin, a director from JAFCO Asia, said, "I support this proposal and we can reach out to them further."

Before the third shareholder could speak, Chen Guiliang asked, "If I were to acquire your shares, at what price would you be willing to sell them?"

Those directors who originally wanted to support the merger of Tudou and Youku immediately stopped talking about the merger plan.

Because if you choose to merge, you'll be severely pressured to lower your price!
David Hand, the representative of Kexin Asia, revealed a hint of delight: "Mr. Chen is willing to be a white knight? At Tudou.com's current stock price, we are willing to sell at a 50% premium."

Chen Guiliang shook his head: "It's too expensive. If you choose to merge with Youku, Youku will only offer a 30% premium, or even just a 20% premium. Moreover, negotiations are not something that can be done overnight. As Tudou's stock price goes down, Youku's conditions will become more and more demanding."

Seow Woon Kwong, a director from Temasek, said, “I can decide on a 50% premium right now. If it’s only a 30% premium, I’ll have to take it to the company for discussion.”

Zhang Suyang, a director from IDG, said, "I also need to go back and discuss it."

Throughout the entire process, Wang Wei, the founder and CEO, did not have any opportunity to speak.

He was completely ignored.

The board meeting ended quickly, and everyone went back to discuss the bottom price.

Chen Guiliang is deliberately muddying the waters. If he doesn't step in, everyone will definitely support merging with Youku. As long as the price isn't squeezed too much, the merger plan will pass.

Chen Guiliang's introduction of the second option will cause the board members and shareholders to hesitate. Because there is now another choice, they might even start arguing about it.

The longer it drags on, the worse the potato's stock price will be.

Furthermore, if the merger plan is chosen, a shareholders' meeting will be held to discuss it.

Tudou.com has a large and diverse group of shareholders, with more than ten venture capital firms involved in the investment. Reaching an agreement will be quite a task.

It would be much easier to sell the shares to Chen Guiliang.

The following day, potato stock continued its downward trend, falling to just $6.12.

The board meeting has not yet been reconvened, but the shareholders have been contacting Chen Guiliang privately.

Tudou.com's shareholding structure is too fragmented, with no one having the right to lead the sale. Everyone wants to sell their shares to Chen Guiliang and run away as soon as possible.

IDG's Zhang Suyang called Chen Guiliang and said, "1800 million US dollars, and we'll transfer all our stock to you. At today's stock price, that's less than a 30% premium."

Chen Guiliang smiled and said, "There are still two weeks left before the six-month listing period is over."

Zhang Suyang said, "Regardless of what the stock price is like in two weeks, we will sign the agreement now and formally fulfill the transfer contract after the six-month period expires."

As a shareholder of Tudou.com, IDG's shares are subject to transaction limits (proportional) if transferred to other shareholders within three months of the company's listing, and the transferee cannot reduce its holdings within six months.

After the six-month period, bulk transactions were allowed again.

Chen Guiliang said, "A 30% premium is too high; a 20% premium is the most we should go for."

Zhang Suyang said helplessly, "President Chen, if you want to be a white knight, at least be a little more generous. Those white knights usually charge more than 50% extra."

“I’m not a sucker. If you’re not satisfied, you can choose the merger with Youku option and see how long it takes to get approved. By then, even if Youku pays a 100% premium, it might not be as good as my 20% premium,” Chen Guiliang said.

"Fine, I'll go back and discuss it again." Zhang Suyang was extremely frustrated.

In this timeline, Tudou.com went public more than six months earlier than in the other timeline. The situation was far more dire!
The stock price suffered three major plunges after being hit by a series of events, including an options accounting error, the Alipay incident, and the US debt crisis. After the first plunge, the stock price recovered slightly, only to plunge a second and a third time.

It's unstoppable now.

Even if Tudou and Youku merge, Youku will have to wait for Tudou's stock price to stabilize before discussing it further. Youku's shareholders aren't pushovers; they, like Chen Guiliang, want to drive down the price.

(End of this chapter)