Reborn Action Star: Starting in Hollywood

Chapter 491 Capital Battlefield, a Good Wife at Home

A mysterious country in the East?

Maybe when people are making memes on the internet, they would jokingly mention India, but in this context, there is no doubt that the box office in the Chinese mainland market has exploded.

So Lin Yuan asked, "What's the estimated box office in China?"

Lin Yuan's heart was filled with anticipation. In his plan, China was the most important foundation for his career.

No matter how high his box office is in Japan and South Korea, it will not make him as happy as a huge box office hit in China.

2004 was the first year of explosive growth for the Chinese film industry. In the previous life, the mainland film market exceeded the 16 billion yuan mark that year, and the box office volume soared by 60% in one year.

Among them, "House of Flying Daggers" with 1.53 million yuan, "Kung Fu" with 1.25 million yuan and "A World Without Thieves" with 1.01 million yuan respectively took the top three spots in the annual box office of domestic films.

The total box office revenue of domestic films was about 8.25 million yuan, which was the first time that the box office revenue of domestic films exceeded that of imported films.

Compared with 2, two years ago, the total box office was less than 2002 million US dollars. The box office of "Hero" with 9 million yuan exceeded a quarter of the annual total box office, which can be said to be a leap in the speed of progress.

The Chinese mainland film market is finally taking a step forward year by year.

Lin Yuan is looking forward to what he will gain when such a new era arrives.

Taylor Swift gave the answer: "The estimated domestic box office revenue for the film in China is 17 billion RMB. That's nearly $2 million!"

This result was like a heavy hammer hitting Lin Yuan’s heart: The people of the motherland are so awesome!
The box office of one movie exceeds the total of all movies in the whole year?

Although "Avatar" also achieved a super high box office of 13.39 billion yuan in China a few years later, that was achieved in the domestic film market which had been developing for several more years.

Now, 5 years ahead of schedule, "The Legend of Tang Dynasty" has surpassed the box office myth of "Avatar" with the enthusiastic support of the whole nation.

This is really not easy.

When "Avatar" was released, a 3D movie ticket sold for more than 100 yuan, and the IMAX version even sold for more than 300 yuan per ticket, which ultimately led to such a high box office.

However, the price of a movie ticket for "The Legend of Tang Dynasty" in China is 50 yuan, which means that a total of 3400 million people went to the cinema to watch Lin Yuan's movie.

This is a very rare thing. In 2004, the number of cinemas and movie screens in China was quite insufficient.

I won’t say much about first-tier cities. In many county-level cities, even the only cinemas have closed down:
Because movies can be downloaded for free on the Internet, even the pirated VCD shops that rent discs on the roadside are losing money, not to mention trying to sell movie tickets for just a few dozen yuan each in the county?

Therefore, it is really not easy to achieve 3400 million moviegoers under such conditions.

"Many government agencies across China were planning to organize group screenings," Taylor continued. "But then they found out they couldn't get any tickets. Isn't that funny?"

Lin Yuan had never imagined that his film, The Heroes of Tang Dynasty, would receive the same treatment as mainstream films. Chang'an City might have been forgiven for doing so, but across the country...

But if you think about it carefully, it is not surprising. After all, this is a Hollywood production that is released worldwide to promote Tang Dynasty culture.

Why isn't it part of China's cultural output? Its propaganda value is no less than that of mainstream films.

It seems completely reasonable to receive group movie viewing treatment from government agencies.

"Your box office performance in China can be described as a result of years of hard work and a sudden rise to fame," Taylor Swift said.

Lin Yuan nodded and said, "But the success of 'The Heroes of Tang Dynasty' is the result of the right time, right place, and right people. I'm afraid the two films that have just started filming will not be able to replicate such results."

"Hero" grossed 2.5 million yuan at the domestic box office, "Pirates of the Caribbean: Dead Man's Chest" grossed 3.2 million yuan, and "King of Spy" grossed 4.5 million yuan.

Every previous movie has made steady progress in small steps, and it can be said that it has grown in tandem with the growth of the domestic film market.

This time, "The Legend of Tang Dynasty" gave him a big boost, and his performance increased by more than 2 times, which was naturally the result of long-term accumulation.

All this shows that Lin Yuan’s status and influence in the country are constantly being deepened and strengthened.

These are what Lin Yuan has always pursued. Now he sees his dreams gradually coming true, which makes him happier than a box office hit.

Taylor Swift continued, "The Korean market has also seen strong growth. They are familiar with the Tang Dynasty theme, with 1800 million viewers."

After hearing what Taylor Swift said, Lin Yuan felt very funny: It’s not what she thought!

Last time, "The King of Spy Wars" had 1550 million viewers, and this time it had 1800 million viewers.

Although the improvement is good, it is far less than that of the Japanese and Chinese markets, which have both doubled in size.

"Koreans have some resistance to the Tang Dynasty, so this result is already very good," said Lin Yuan.

"Ah? I don't understand." Taylor Swift doesn't know much about East Asian history, so naturally she doesn't understand what Lin Yuan said.

"If it's set in the Ming Dynasty, it would do much better in Korea. But I don't have to consider catering to such a small market in Korea, so just do it casually." Lin Yuan replied.

In the minds of many Koreans, the Tang Dynasty interrupted the glory of Goguryeo, which meant it interrupted the path of their national rise, and naturally became a target of hostility.

In fact, Goguryeo and Goryeo have nothing to do with each other. It is completely a random claim of ancestry by Koreans.

If they regard Silla, Baekje, and Goguryeo that existed on the Korean Peninsula as their ancestors, then they always avoid talking about the Battle of Baekgang in the Tang Dynasty, which is quite hypocritical.

Koreans have some resistance to the Tang Dynasty, but the Ming Dynasty, as the father of the Joseon Dynasty, is quite popular in Korea.

However, it is impossible for Lin Yuan to affect his film expression just for the sake of Korean people's preferences.

But even though it was a Tang Dynasty theme that Koreans were not very fond of, "The Legend of Tang" still achieved 1800 million viewers in South Korea, setting a new historical record.

It can be seen that the Korean market's love for Lin Yuan has really surpassed national sentiment to a certain extent.

Then, Taylor Swift introduced that "The Legend of Tang Dynasty" has achieved huge box office breakthroughs in the European market, Southeast Asian market, South American market, and Indian market, and she will not go into details.

It is worth mentioning that because of the Kendo Conference held this year, the original Southeast Asian and South American markets’ love and recognition for Lin Yuan have been further deepened. This is also a major reason why "The Legend of Tang Dynasty" was able to achieve a box office breakthrough in these two regions.

Lin Yuan didn't expect this.

But as a film actor, it is not difficult to understand that his fame, public image, and popularity will greatly affect the box office of the movies he stars in.

Therefore, he never lived a dissolute and decadent private life like those Hollywood stars, disregarding their own image.

If he only considers the European and American film markets, then none of that really matters.

But if he wants to win the love of movie fans all over the world, he must consider his own character and image.

Then, a hidden worry once again emerged in his mind.

Lin Yuan said, "The stock price of Lin Yuan Pictures is really worrying me right now."

"Worried?" Taylor asked in confusion.

"The stock price is already very high now. If it continues to rise, many individual investors may suffer heavy losses." Lin Yuan replied.

"If the stock price of Lin Yuan Pictures collapses, it will not only let down my fans who love me, but will also cause huge damage to my personal image," Lin Yuan further explained.

After hearing Lin Yuan’s explanation, Taylor Swift expressed her understanding, but this situation is really rare.

The so-called individual investors are retail investors. There are certainly speculators among them, but a large part of them are definitely Lin Yuan’s fans.

When they buy Linyuan Pictures' stocks at high prices and get locked in, they may face huge risks of losses.

This is something Lin Yuan absolutely doesn't want to see.

Taylor Swift understands Lin Yuan’s concerns. For most major shareholders of listed companies, they wish the stock price would be higher.

Let the stock price bubble up to the extreme, and then take the opportunity to secretly cash out.

Wait until the stock price collapses, then buy it back at a low price and easily make a profit from the price difference.

As for the life and death of retail investors?
If retail investors are not allowed to take over at high prices, how can there be any interest rate spread?

But Lin Yuan didn't want to see this scene at all. It would be completely harmful to him.

Linyuan Pictures' stock price had already reached $28, approaching the $30 mark.

When the final box office results of "The Legend of Tang Dynasty" come out, I'm afraid the price will continue to soar.

Betty's prediction is that the price of Linyuan Pictures, driven by this frenzied atmosphere, may even exceed the 40 billion US dollar mark!
If this scene really happens, it means that the market value of Linyuan Pictures will reach 3000 billion US dollars!
In 2004, this market value meant that Linyuan Pictures would surpass Microsoft, which had a market value of US$2884 billion, to become the world's second most valuable company after General Electric.

For this result, there is no need for any financial analysis at all. Anyone can conclude that the bubble of Linyuan Pictures is too big.

How can a film and television company have the market value to exceed that of Microsoft, ExxonMobil, Pfizer, Intel, Shell, Boeing... and other truly important companies?

Linyuan Pictures' profit in 2003 was US$21 billion. Even if calculated based on the previous stock price of US$20, the market value of US$1480 billion means a PE ratio of 71 times.

This price is already very dangerous. The market has overdrawn the box office performance of "The Legend of Tang Dynasty" and given a high valuation in advance.

If "The Legend of Tang Dynasty" really reaches a box office of 40 billion US dollars, Linyuan Pictures' profit in 2004 may reach 32 billion US dollars.

By then, the PE ratio of Linyuan Pictures, which has a market value of US$1480 billion, will drop to 46 times. Although it is still very high, it will not be so dangerous.

But if the stock price of Linyuan Pictures is really pushed to $40 as Betty expected, it means the PE ratio is as high as 170 times!
This is equivalent to an investment in Linyuan Pictures, which will take 170 years to pay off.

Even if calculated based on the estimated profit of US$32 billion, the PE ratio is still at an extremely high level of 100 times.

For emerging technology companies, a PE ratio of 100 is very high and carries considerable risk.

Not to mention that Linyuan Pictures is already a giant enterprise with a market value of over 100 billion US dollars, and it is impossible for it to have such a high growth space.

Once the stock price of Linyuan Pictures collapses at such a high level, all holders will suffer huge losses.

The U.S. stock market has a short-selling mechanism, and Lin Yuan doesn't believe that those financial giants who smell blood will not take the opportunity to take a bite.

At that time, the stock price of Linyuan Pictures will fall even more sharply, perhaps from a high of $40 to $15, or even lower.

If such a situation really happens, regardless of whether it is related to Lin Yuan or not, his personal image will inevitably suffer huge damage.

What’s even more hateful is that Lin Yuan didn’t get any benefits from this round of stock price bubble.

Not to mention that Lin Yuan's share reduction would mean he would lose his absolute controlling stake in the company, but even if he wanted to do so, he couldn't.

Because most of the shares he holds are in the lock-up period and cannot be traded.

The amount that can actually be used for trading and cashing out will not exceed 10%.

Based on the market value of $3000 billion, if you sell it during this bubble period, you can also get $300 billion in return.

Is it okay to wait for the stock price to drop and then buy it back to make some profit from the difference?

The answer is still no, because according to US securities laws, when a major shareholder holding more than 5% of the shares sells the stock, he must raise his placard to make a public announcement.

The so-called public announcement is to tell the public who you are and how much you are going to sell.

In this way, the public will immediately obtain relevant information, feel the changes in the market, and decide how to respond in advance.

Not only that, major shareholders are not allowed to reduce their holdings by more than 1% each time, and stock liquidation is strictly restricted.

As the actual controller of Linyuan Pictures, if he announced to the public that he was planning to sell off a large number of the company's shares.

What will the public think?
Is something wrong with the company? The boss is about to run away!

In this case, the stock price of Linyuan Pictures will inevitably fall sharply, making it difficult for him to actually cash out at a high price.

In fact, most bosses of listed companies face this dilemma.

When the stock price reaches a high level and you start cashing out, you must raise a sign to make it public.

Then, as the stock price falls, you sell as it goes down. If the stock price is not high enough, you may not be able to cash out much money.

This is also the reason why the net worth of most bosses of listed companies is fake.

It is said that his net worth is tens of billions or even hundreds of billions of dollars, all of which is supported by the stock price. It would be considered impressive if he could actually cash out a quarter of it.

Therefore, it is still impossible for Lin Yuan to cash out 10% of the stock price at a high level.

This time, Linyuan Pictures' stock price is rising, and he can only take the beating without getting any profit at all.

and many more……

Lin Yuan suddenly realized: If he raised his placard and made a public announcement, pretending to sell off the company's stock, would he be able to suppress the momentum before the stock price rose wildly?
When this thought came to Lin Yuan's mind, a large number of related questions immediately emerged:

He doesn't really want to sell the stocks because that would mean losing absolute control. If he is just pretending to do so, how should he do it?

The sudden public announcement of the stock price drop caused the stock price to fall. Shouldn't the major investors with whom he has close ties be notified? Otherwise, their interests will be damaged, which will affect their support for Lin Yuan.

But if I tell the big investors privately, would it involve improper disclosure of information and leave legal leverage?
……

A series of problems made Lin Yuan feel quite overwhelmed.

So he said, "Gakki, help me prepare for a conference call. I want to talk to Betty." Professional matters should be left to professionals.

Lin Yuan believed that with Betty's presence, there would definitely be a perfect solution to this problem.

Soon, the conference call was ready. Lin Yuan, Taylor Swift, and GAKKI sat together. Betty's voice came from the phone: "Lin Yuan, is there anything wrong?"

"Sorry to bother you, it's late there, right?" Lin Yuan asked.

"It's only eleven o'clock, just tell me what you want to say," Betty said.

Then, Lin Yuan expressed all his concerns about the stock price and his desire to curb it.

After hearing Lin Yuan’s narration, GAKKI and Taylor Swift realized that he had thought so deeply.

After listening to Lin Yuan's words, Betty's reply came over the phone:

"Regarding your first question, as long as you issue a share reduction announcement, it will definitely have a suppressive effect on the stock price, but the effect may not be as good as you imagine. I am worried that it will not achieve the effect you want."

"Why? As the actual controller of the company, I have sold a large number of stocks. Isn't the market worried?" Lin Yuan asked puzzledly.

Betty explained: "You don't know enough about the Securities Law. You only noticed the public announcement of major shareholders raising their hands, but you didn't know there are restrictions on selling shares.

As the actual controller, the proportion of your equity reduction within one year shall not exceed 20% of the total share capital held by you, nor shall it exceed 5% of all share capital.

In other words, you can’t sell off a large number of shares, so it won’t have the effect of suppressing the stock price.”

After hearing Betty's explanation, Lin Yuan immediately understood.

It has to be said that as a mature capital market, the various regulations of the U.S. securities market are apparently quite complete.

The so-called prohibition on reducing holdings by more than 20% of the total share capital within one year means that if Lin Yuan owns 15% of the company's shares, the total amount of share reduction in one year cannot exceed 3%.

The purpose of this provision is to limit the speed at which the actual controller sells off shares. Even if it is faster, it will take 5 years to sell all the shares.

However, if the company's actual controller dares to reduce his holdings to the maximum for five consecutive years, the company's stock price may fall to the level of delisting in the second or third year, so it will be really difficult to cash out.

The limit of no more than 5% of all shares is an absolute limit. Assuming Lin Yuan owns 65% of the shares, combined with this limit, he can only reduce his holdings by 5% annually. He wouldn't be able to sell out all his shares in just five years, and it would take a full 5 years to sell them all.

The restriction of not more than 20% of the total share capital is aimed at actual controllers whose shareholding ratio is not high enough, while the second restriction of not more than 5% of all share capital is a further restriction on those actual controllers with extremely high shareholding ratios.

The two rules combined are like a tight ring around the heads of the company's major shareholders and actual controllers.

The result of this is that in reality, if a company boss wants to cash out and run away, he cannot sell the company on the securities market.

In most cases, an agreement is reached with other companies or large investors to acquire equity in one go through a one-time acquisition agreement.

If Lin Yuan can only reduce his stake by 5%, he may not be able to suppress the current frenzied atmosphere.

He didn't expect that the plan he proposed would run aground at the first step.

Betty's voice came from the phone: "In fact, your plan can achieve a similar effect by just changing the method."

"What do you say?" Lin Yuan immediately became excited when he heard that there was still hope.

"One characteristic of the capital market is that the other party often does not believe the information you tell them openly. But if you hide it and let them discover it themselves, they will believe it without a doubt," said Betty.

This is easy to understand; that's human nature.

Therefore, when Lin Yuan openly announced the information of share reduction, most people would not believe that the stock price would collapse.

"So how do we do it specifically?" Lin Yuan asked.

"You know, some time ago I bought a batch of Linyuan Pictures shares at a cost of around US$20," Betty said.

Lin Yuan knew about this. At the premiere of the movie "The Legend of Tang Dynasty", all the guests were buying stocks crazily, but Betty did not move because she had already completed the acquisition at a low price.

How many shares does she hold?

Lin Yuan didn't ask before because he absolutely trusted Betty, so he wouldn't specifically ask about things that had no impact on him.

Betty's voice continued on the line: "On behalf of Morgan Stanley, I have invested a total of 4 million shares, which is 2000% of the equity."

Wow! He actually took so many shares. If he took any more, it would reach 5%, and he would have to raise a sign for public disclosure. No wonder she didn't continue buying.

Based on Linyuan Pictures' share price of 20 yuan, this is an investment of nearly 84 billion US dollars. The key is that it was completed silently. It has to be said that Morgan Stanley is indeed powerful enough.

"If I sell all my stocks quickly and roughly, what do you think the market will think?" Betty asked.

"Everyone is worried and suspicious. Has the stock price peaked? Has a big investor got inside information and started to sell off their stocks?" Lin Yuan replied.

"At this time, a few days later, you suddenly announced your share reduction. Combined with my preemptive behavior a few days ago, what will Volkswagen do?" Betty continued to ask.

"The shoe of doubt has dropped, the herd mentality has taken effect, and people have started to sell their stocks," Lin Yuan replied.

Betty's actions simply amazed Lin Yuan.

That's what she said: keep it hidden from you, let him discover it himself, and he will believe it.

Following Betty's approach, the stock price will definitely be brought down.

This should have made Lin Yuan happy, but he said guiltily: "If I do this, you will lose a lot of money."

"It's Morgan Stanley that's making less money. What does it have to do with me, Betty Adams? Besides, Morgan Stanley has already made enough money. There's no need to earn every last penny." Betty said.

Although Betty spoke very generously, Lin Yuan knew that he still owed her a favor.

For Morgan Stanley controlled by Betty, the way to maximize profits is to wait for the stock price to continue to rise, at least until the stock price exceeds $35, or even wait until it reaches $40 if you are greedy before selling.

The more the stock price rises, the more Morgan Stanley earns.

But now, in order to comply with Lin Yuan's stock price control target, Betty must start selling stocks at a price of around US$28.

This will of course lead to the inability to maximize profits and will result in a lot less money being earned.

But for Lin Yuan's benefit, Betty sacrificed her own performance without hesitation.

"Don't say thank you to me, I'll be angry." Betty on the phone said first.

Lin Yuan could only keep his feelings to himself as Betty continued, "The announcement of share reduction has a duration. You don't need to actually reduce your holdings after the time limit expires. You only need to issue an announcement to withdraw the announcement.

At that time, the stock price of Linyuan Pictures had almost fallen. Your act of withdrawing the announcement of share reduction could actually help stabilize people's hearts and stabilize the stock price.

This operation is a little complicated. Forget it, don't worry about it, just leave this part of the process to me. Anyway, we at Morgan Stanley are the guiding broker for Linyuan Pictures. "

"Okay, I'll listen to you. What about the remaining questions?" Lin Yuan continued to ask.

"Regarding the second question, you have considered it very carefully. If you suddenly start to suppress the stock price, you do have to take into account the interests of those big investors. In fact, if they cooperate and sell stocks together, you can better achieve your goal of curbing the stock price." Betty said.

This is very easy to understand. Many guests started buying Linyuan Pictures stocks at the premiere of "The Legend of Tang Dynasty".

For example, Ron DuPont is one of the more important allies among them.

They entered the market relatively late, so the cost price of holding Linyuan Pictures was naturally much higher than Betty's price of $20.

The cost price for many investors should have reached US$24 or even higher.

Now the share price of Linyuan Pictures is $28, and they can still make a profit on paper.

But once Lin Yuan starts to suppress the stock price, if they don’t have time to escape, their original floating profits may even turn into losses, which would be really embarrassing.

Therefore, it is quite necessary to provide them with appropriate information.

But Lin Yuan was also worried about a third issue: Would telling the big investors privately involve improper disclosure of information, leaving legal leverage?
Insider trading will at least result in a huge fine. If Lin Yuan is caught, he may even face criminal charges.

Even if he can escape legal sanctions, he will inevitably suffer huge losses in his reputation.

In response to this question, Betty smiled and said on the phone: "The last thing is easy to solve. Your words come from your mouth and only reach my ears. As for how others know, it has nothing to do with you."

Hearing Betty's answer, Lin Yuan was moved again.

It wasn't as easy to solve as she said, but she just took it all on herself.

Betty's proposal was that she would be responsible for communicating with those big investors.

In this way, Lin Yuan will naturally not leave any handle, but if trouble arises, the blame will definitely be directed at Betty.

Although given her status in the financial circle and the political power of the Adams family, this kind of private disclosure of information is unlikely to cause any substantial harm to her.

But it was still a bit of trouble, and Betty was willing to take the risk.

What else can Lin Yuan do about this?
I can only try harder next time we meet and fulfill her wish of having a child as soon as possible.

After all of Lin Yuan's worries were easily resolved by Betty, he said, "No problem is a problem for you. You really helped me solve a big problem."

Betty said on the phone: "No, I can't solve all the problems. There is at least one problem that I can't do anything about."

Lin Yuan asked, "What?"

"That is, once the stock price collapses and enters a downward channel, I can no longer control the price it will fall to," said Betty.

Lin Yuan fully understands this point. When any asset rises, although it is accompanied by enthusiasm and often sets new highs, the price ceiling is relatively easy to guess.

Even if you guess wrong, it’s not a big problem. At most you will earn less, but you will still make a lot of money.

The decline was accompanied by panic and stampede.

It is hard to say to what price Linyuan Pictures’ stock price will fall at this point.

For Lin Yuan, the healthiest outcome would be if the stock price were around $20.

But reality may not be what he wishes.

What if it falls to $15?
Even a drop to $10 is not impossible!

Because even with a share price of $10, Linyuan Pictures' total market value is still as high as $850 billion. Even if calculated based on the profit of $2004 billion in 32 after the release of "The Legend of Tang Dynasty", the PE is still 26 times.

When the stock price was rising wildly, everyone was telling stories about wealth, and at that time a PE of 71 times was not too much.

Once the stock price drops rapidly, all people are telling ghost stories. In that case, a PE of 26 times may even be considered too high.

This is the capital market, the place where human nature is best reflected.

In response to Betty’s concerns, Lin Yuan’s answer was: I don’t care!

Anyway, Linyuan Pictures has achieved its financing goal, and he must hold those shares in his hands to ensure absolute control over the company.

In this case, what impact does it have if the company's stock price is higher or lower?

To use an inappropriate analogy, he is like a person who bought a house in Shanghai in 2010. If the housing prices soared and then fell in the next ten years, what does it have to do with him?

He didn't buy at a high price, and he just needs to hold on and won't sell, so he doesn't need to care about price fluctuations at all.

So, Lin Yuan said to Betty, "It's okay. For me, I don't care if the stock price drops."

Betty said: "You can not care, but there are two things you must consider."

"Two things?" Lin Yuan asked.

"The first thing is that Linyuan Pictures has a large number of locked-in cornerstone investors, and you must also consider the interests of these people. If the price is smashed below $13, you must consider how to pull the stock price up again within a year," said Betty.

"I know. I'm not worried about this at all. I have the confidence to do it," said Lin Yuan.

When Linyuan Pictures went public, cornerstone investors subscribed for shares at a price of US$10, and they subscribed for shares at a price of US$13 during the first private placement.

These cornerstone investors all have a one-year lock-up period and have not yet made any profit.

If the price of your stocks is lower than the cost of holding them when they are released after a year, you will be very sad.

Lin Yuan is really not worried about this. He believes that the price of Lin Yuan Pictures may drop temporarily, but with his popularity and outstanding performance, it will rebound soon.

Regardless of how high it will rise, Lin Yuan is fully confident that it will at least remain above $15 to ensure that cornerstone investors can make a profit.

"The second thing is that after the stock price drops, it will become even more difficult for you to refinance," Betty continued.

Regarding this question, Lin Yuan asked with some doubt: "I can't dilute my equity anymore. How can I still raise funds? And do I need to raise funds?"

Betty's firm reply came over the phone: "We have to do it! If you want to truly build your own consortium in the next five years, you can't miss this opportunity!"

(End of this chapter)