What's wrong with me being a rich man?

Chapter 497 Lingang's Little Stock God

Alibaba's IPO in the US has attracted global attention.

Its offering price was $68, raising over $200 billion, making it the largest IPO in US stock market history.

Yu Xing wanted to take this opportunity to fulfill the funding needs of the DLF Foundation and was very confident in it. However, the foundation could not buy Alibaba's shares at the issue price and could only buy them directly on the stock market.

The underwriters for Alibaba's IPO were six major investment banks, including Goldman Sachs and Morgan Stanley. Theoretically, they could buy new shares before the market opened, but in reality, the vast majority of the shares had already been divided up by globally renowned asset management giants such as Fidelity, BlackRock, or sovereign wealth funds that have long-term business relationships with Alibaba.

As for the remaining shares, Alibaba's IPO was oversubscribed by 14 times, which means there is fierce competition and the need to commit to lock-up periods and demonstrate institutional qualifications. It is impossible to leave them to speculators like DLF.

But Yu Xing felt that there was no problem with it.

The only problem is that the price-to-earnings ratio of over 300 times on the first day of listing seems too high, which is why some people are worried.

That's how Yu Xing explained it to Yu Kai.

Yu Kai could only sigh, "Being trapped is being trapped, Mr. Yu, you're really... sigh..."

He complained helplessly, "Mr. Yu, we told you there were risks, there were risks. We even asked an economist friend to analyze it, but you insisted on it, insisted on it, and now we're stuck with it..."

Alibaba opened at $92.7 and closed at $93.89 on its first day of trading, but the holding cost of DLF was $94.7.

Yu Xing remained calm: "Dr. Yu, don't worry. Good things come to those who wait. Prices will definitely rise. Although we are speculating, we can't be too speculative."

Yu Kai was skeptical, but since things had come to this point, he had no choice but to accept it.

The following day, Alibaba's stock price corrected, falling below the $90 mark and closing at $89.89, a drop of 4.26%.

Yu Kai sounded tired on the phone as he asked, "Mr. Yu, what should we do?"

Yu Xing calmly replied, "It's just a technical adjustment, don't worry."

Yu Kai remained silent.

On the third day after Alibaba's IPO, media reports indicated that Alibaba's cross-border e-commerce platform "OneTouch" faced bad debt risks, involving approximately $1.2 million. This negative news caused the stock price to fall by 3.03%, closing at $87.17, with an intraday low of $86.62.

This time, Yu Kai didn't call; he only sent a symbol via WeChat: ?

Three days after listing, some institutions have cashed in their profits. Goldman Sachs, Morgan Stanley and others have already sold $20 billion worth of shares. Today, this has put pressure on Chinese concept stocks as a whole, with all of them falling by 5%-8% in the same period. The overall market sentiment has turned cautious.

Yu Xing replied with a voice message: "It will definitely rebound. This kind of news is just something short sellers pick out to drive down prices. It's just a trick by small short sellers. Trust me."

Yu Kai thinks that Mr. Yu may be good at running a company and has a heart to help advance the cause of machine learning, but he may not really understand the stock market, let alone short sellers.

However, on the fourth day after Alibaba's IPO, the stock price did rebound, closing at $88.92. UBS even set a target of $110, emphasizing the moat of Alibaba's ecosystem.

Seeing this, Yu Xing called Yu Kai and said, "See? It rebounded. I told you there was a battle between bulls and bears here."

Yu Kai couldn't understand why President Yu could remain so calm, and reminded him, "President Yu, we're still at a loss. It's only a little over $1 higher than yesterday, and our cost basis is $94.7! What's there to be proud of!"

Yu Xing explained reluctantly: "Everyone has never seen such a large-scale IPO before, so their emotions are all complicated. You'll get used to it. Trust me, I'm the little stock god of Lingang, known as the carbon silicon Buffett."

Yu Kai directly posted President Yu's words on his WeChat Moments, hoping that the other party could live up to such a title.

However, the rebound ended there, and the stock price fluctuated for the next two trading days, hovering around $89. Alibaba's stock price was still down 4.9% from the closing price on the first day, and its market value shrank to $2195 billion.

The DLF Foundation has now lost 6.1% of its all-in bet, reducing its initial $1800 million investment to $1691.7 million, a loss of $128.3 million.

Yu Kai didn't know what to say, so he could only send a brief question on WeChat: "Lingang's Little Stock God?"

"Silicon Carbon Buffett?"

Yu Xing, somewhat helplessly, explained, "It's just a paper loss; we'll have to wait and see the final result."

"Mr. Yu, it's not that I want to say anything, but this operation makes people... well, I'll be frank, this operation seems unreliable, and some people are not satisfied and may be considering leaving the foundation." Yu Kai mentioned the morale of those whose confidence fluctuated with the stock price. They already didn't have enough money, and now the investment not only didn't make money, but also resulted in losses.

Yu Xing exerted his influence succinctly: "Tell everyone not to worry, this is just a small paper loss, and Red Falcon Capital will cover it."

Yu Kai finally heard some good news: he knew that President Yu might also feel apologetic for this reckless operation, and that Red Falcon Capital was willing to continue to provide funds to the foundation, which must be his will.

He sent a short essay, saying he would help his colleagues stabilize their emotions, and also talked about how the Red Falcon Fund would be used.

Seeing that Dr. Yu had misunderstood, Yu Xing explained, "Red Falcon's money is for replenishing its reserves, Dr. Yu, don't be afraid."

Upon seeing this, Yu Kai's pent-up emotions finally erupted: "Buy more? Buy more my ass!!"

He immediately called, heartbroken: "Mr. Yu, wake up! Do you really think you're some kind of stock market genius in Lingang?!"

Yu Xing said, "Dr. Yu, you don't understand. The DLF Foundation's future operations can rely entirely on this method, but we may need to be patient in the beginning."

Yu Kai sighed: "Really?"

Yu Xing said decisively, "Indeed!"

After the call ended, he immediately called Liu Wanying to ask for her opinion on Alibaba's stock price.

"The market value is too high. Holding it for the long term is definitely not a problem. Alibaba is currently very leading in the domestic e-commerce market. Once it goes public, it will have money to use Tmall to compete with JD.com's strategy." Liu Wanying said somewhat casually, "But the current situation is that the expectation of the Fed raising interest rates is quite strong. Once the interest rate hike cycle begins, not only Alibaba, but all Chinese concept stocks will definitely be under pressure."

Yu Xing then asked, "When do you think Alibaba's stock price will rise?"

Liu Wanying couldn't help but laugh: "I'm not some stock market guru in Lingang. You're asking me? You might as well ask Ma Chuan if there's any good news. Overall pressure doesn't mean individual stocks can't rise, right?"

Yu Xing frowned: "Compliance, compliance, we can't engage in insider trading."

"Let's just hold on for now. At least this year's Double Eleven should have some stimulating effect," Liu Wanying said, mentioning a timeframe.

Yu Xing realized what was happening and decided to share the good news with Yu Kai.

"Wait, wait." Liu Wanying's voice suddenly turned formal. "Don't worry about Alibaba's stock price for now. Think about yourself first. Alibaba is going to get into music short videos."

Yu Xing frowned: "You saw the news? Just came out? A short music video? And it's targeting Tencent?"

Liu Wanying quickly browsed the latest news: "Yes, it's also in Mus mode. It seems they're determined to stick to Tencent."

Yu Xing pondered the impact of this news, understanding why Alibaba would intervene at this time.

Simply put, after going public, we have more money, so we can free up resources to plan for more opportunities.

As for why it chose the Mus mode, the main reason is definitely to compete with Tencent, and the secondary reason may also be the consideration that WeChat Moments already has a short video function.

Yu Xing was silent for a moment, then commented, "Not really bad news."

“From the perspective of the overall short video market, more investment can expand the market. Alibaba and Tencent will still not share profits with institutions, so Lingang will receive more attention,” Liu Wanying said thoughtfully. “It’s not exactly good news.”

(End of this chapter)