Reborn Action Star: Starting in Hollywood

Chapter 369 Short-selling Report Released
"Bang!"

Mills Brown smashed the kettle against the window with a loud bang, shattering the glass all over the floor.

Still not satisfied, he grabbed the pen and water bottle on the table and smashed it at his favorite oil painting on the wall.

"Bang!"

The splashing black ink instantly ruined this Picasso masterpiece worth more than $300 million.

Mills Brown is 56 years old. He is tall, has a square face, and a beard that represents masculinity. He is a typical old white man.

As we all know, whether a man is still young depends on his career achievements.

A forty-year-old worker is a middle-aged or elderly person, while a forty-year-old boss of a listed company is a young hero.

As the actual controller of MGM Studios, even though Mills is in his fifties, he is still in his prime.

At this moment, he was as furious as an old lion king who was driven off the throne. Just like the lion on the company's logo, he could only roar helplessly but could not change his fate of defeat.

"Mr. Brown, are you all right?"

Lucinda, the vice president of MGM who was responsible for sniping "The King's Avatar", pushed the door open.

"Who let you in? Get out! Get out!" Mills roared angrily.

"Several representatives of the company's major shareholders and institutional investors are waiting for you outside the door." The beautiful Lucinda said aggrievedly.

If she wasn't stuck in the middle and it wasn't difficult for her, she wouldn't want to come here and get into trouble.

Even though she had been the lover of this man who was nearly 30 years older than her for several years, Lucinda still did not dare to go against Mills's will in the slightest. She had witnessed with her own eyes how several executives who had expressed slightly different opinions had met with miserable end.

"What's the rush? What are they in such a hurry for? It's just a report. The sky isn't falling!" Mills yelled.

"..."

Lucinda didn't know how to respond. She completely understood what the major shareholders were worried about.

The sky didn’t fall, but the stock price collapsed…

Yesterday, October 2003, 10.

Morgan Stanley, a well-known international investment bank, has released two short-selling reports in succession:
A Warning to Investors: Stay Away from Columbia Pictures and Protect Your Hard-Earned Wealth

"Highly alert to MGM Studios, the huge financial risk of impending explosion"

As soon as the short-selling report was released, MGM’s stock price immediately opened 16% lower as soon as the stock market opened today!

By noon, the decline had widened to 32%.

Based on MGM's current market value of $45 billion, this means more than $15 billion in wealth evaporated in an instant.

There is no limit on the rise and fall of US stocks. The market value dropped by such a large amount in one day, which is equivalent to Mills' wealth shrinking by one-third.

pain! It hurts so much!
No wonder Mills was so furious.

What’s even more frightening is that the stock price decline cannot be stopped at all and is showing a trend of intensifying.

Seeing that Lucinda didn't say anything, Mills stared at her, and his fierce eyes made her feel extremely nervous.

What are you looking at me for?

You are the boss, you should solve the problem!
I'm just a vase who relies on my beauty to get ahead. You can't expect me to solve your current predicament, right?
Lucinda screamed in her heart.

"How about I tell them that you're not feeling well today and ask them to come back later?" Lucinda asked carefully.

Mills took a few deep breaths and said, "Let them in. They won't give up until they're appeased."

"Then I'll go and ask them to come in." Lucinda turned around and tried to escape.

"and many more!"

"You say."

"Organize people as soon as possible and prepare a rebuttal statement for me. I will not allow this short-selling report to continue to 'mislead' investors and shareholders!" Mills said angrily.

"Yes! I'll go right away." Lucinda trotted out of the office, ushered in the major shareholders who came to seek explanations, and then returned to her office.

"Damn it! How am I supposed to refute this short-selling report? Everything they say is right. I can't help but agree with it." Lucinda muttered to herself in distress.

Morgan Stanley is worthy of being one of the pillars of the investment world. The two reports it produced are well-reasoned and based on detailed data, and each point of view hits MGM's fatal weakness.

No wonder the stock price fell so sharply.

Take the short-selling report on MGM Studios as an example, it is 268 pages long.

First, the three major financial risks of MGM are clearly listed, followed by detailed data analysis, and finally a conclusion is drawn.

The three major financial risks come from:
First, misleading performance.

The report elaborated in detail that MGM falsely reported film revenue through disassembly and shuffling, while concealing many operating expenses in order to mislead investors.

To put it simply, MGM is telling everyone that I have several very profitable movies. Look, the revenue is so high, so when my other movies are released, won’t I make even more money?

But the reality is that the revenues of these films were pieced together from other films, and it was a false face-saving project that played a numbers game.

What's more, even a face-saving project is not reliable, because MGM only said how much money it earned, but did not say how much profit it made.

It is not yet the financial reporting season, so there is no need to release financial reports audited by accounting firms. Therefore, in company announcements, this concealing method can be used to report good news but not bad news.

Second, cash flow crisis.

The short-selling report further elaborated on MGM's current cash flow shortage problem.

It took nearly 50 pages to elaborate on the cost of MGM making 20 films a year, which completely exhausted the company's cash flow.

Originally this was not a big problem, as Linyuan Film Company also operated in this way to maximize the use of funds.

But the key is that your movie has to make a profit!

None of the films released by MGM this year met the expectations when the projects were launched.

Therefore, MGM was already in a cash flow crisis at this time.

The report reminds everyone that at the beginning of this year, MGM signed a strict box office betting agreement with major theaters in order to snipe Lin Yuan's movie "The King of Spy".

This additional expenditure has put MGM's already tight cash flow at even greater risk of drying up.

Third, the decline in future performance.

The report expressed pessimism about MGM's performance in the next year and even in the next three to five years.

Morgan Stanley was very smart not to get bogged down in details and discuss why MGM's films, which had not yet been released, did not have to expect box office results.

Because that is something that will happen in the future, predicting the box office makes you look like a charlatan.

The reason why the report is not optimistic about MGM is mainly based on the rapid expansion of the film market in recent years and the development trend of the entire film industry.

In the past few years, the global box office champion was only at the level of 5 million to 6 million US dollars. In just a few years, Lin Yuan's film box office exceeded 20 billion US dollars.

And it's not just Lin Yuan's films that are so eye-catching, the entire film market is expanding rapidly.

This means that the Warring States period has come again in the film market, and the intensified competition has caused the entire industry to enter a stage of rapid integration.

The newly emerging Linyuan Film Company, Universal Pictures, Warner Bros. and Disney Pictures have joined forces, shared their resources, and established a number of highly competitive and well-established film series IPs.

Because MGM had a grudge against Lin Yuan, he was excluded from this largest gang organization.

This makes it difficult for MGM to gain sufficient support from allies, and it is even more hopeless to overcome the current crisis.

Morgan Stanley's report can be summed up in three sentences:
MGM didn’t make money in the past, and now it has no money, so it will be difficult to make money in the future!

It is easy to imagine why this report caused MGM's stock price to crash.

"That really makes sense. As an MGM executive, when I saw this report, I couldn't help but feel that the company was doomed. How can I refute that?" Lucinda grabbed her blonde hair in distress.

(End of this chapter)