pjbooks Chapter 269 The Calculations of Wall Street
Chapter 269 The Calculations of Wall Street
Chapter 269 The Calculations of Wall Street
At Goldman Sachs headquarters, Henry Paulson looked at the Wall Street tycoons seated in the conference room. As the host, he began with standard Wall Street social etiquette, maintaining his gentlemanly demeanor in front of these bigwigs who valued money more than face.
But just as he opened his mouth, an impatient voice came from across the street, "Henry, stop wasting time, get to the point."
"You didn't invite all of us here today just so we could tour your conference room that overlooks New York Harbor, did you?"
The speaker was Richard Fuld, the head of Lehman Brothers and Henry Paulson's notorious nemesis on Wall Street.
At this moment, Fold leaned back in his chair, his hands crossed in front of his chest, looking just like a vulture ready to pounce on its prey.
Henry Paulson glanced at him, thinking that the guy was still the same as always, so impatient, as if he was afraid that if he hesitated to speak even a second longer, he would lose the initiative forever.
However, he had no intention of arguing with Fuld today. He had gathered everyone here because he had a big plan to move forward.
He suppressed his inner turmoil, maintaining a professional smile, and slowly began, "Everyone, you've probably all heard about the IPO issue with YueDong Games recently, haven't you?"
As soon as he finished speaking, the conference room fell silent instantly, and many people frowned as if they had heard some unpleasant news.
Richard Fuld slammed his hand on the table, his anger practically overflowing. "Henry, did you call us here today just to show off that Goldman Sachs has made another sure-fire profitable deal? We're not Goldman Sachs investors. We don't need you to report Goldman Sachs's great achievements to us, and we don't want to hear you bragging here."
When YueDong Games was raising funds, Goldman Sachs used a lot of tricks. Not only did it significantly increase YueDong Games' valuation, but it also snatched the biggest piece of the pie from MGM when other institutions weren't paying attention.
There's no need to say more about YueDong Games; its post-IPO market capitalization forecasts have made Wall Street institutions green with envy.
The latest industry data shows that many institutions are bullish on YueDong Games' market value, with the lowest estimate being $80 billion.
Based on the current trend, even if YueDong Games goes public at an offering price of $50, a stock price increase of more than 15% is a conservative estimate. If they are lucky, breaking 20% is not a problem.
If YueDong Games' net profit this year exceeds the previously estimated $2.74 million, then the stock price will rise further.
As for MGM, which was hijacked, its current development makes other organizations grit their teeth in envy.
MGM's Playboy lingerie is incredibly popular in overseas markets, even more so than in China. The lingerie is sold out as soon as it's put on the shelves.
The two films released this summer have also made a fortune, especially "Titanic," which has grossed over $16.2 billion and is still growing steadily at a rate of millions of dollars per day.
One organization has given a global box office forecast of $22.4 billion, making MGM undoubtedly the most successful film company in Hollywood this year.
But these Wall Street giants originally had the opportunity to get a share of these profits.
If it weren't for Goldman Sachs, they might already be shareholders of Dynamo Games or MGM.
Now, things have gotten even worse. Not only did they not get to eat the meat, they didn't even have the chance to smell its aroma. They could only watch helplessly as Goldman Sachs enjoyed it all by himself through the sealed glass.
In their view, Henry Paulson's remarks were simply a deliberate attempt to show off and humiliate them to their faces.
Seeing the displeased looks on everyone's faces, Henry Paulson said sincerely, "Gentlemen, don't misunderstand. I didn't call you all here today to show off, but to discuss something with you."
"I hope we can join forces to speed up the IPO process of YueDong Games and work together to boost its stock price to even higher levels."
They were all seasoned veterans who had spent decades navigating the complexities of Wall Street, and they immediately understood the deeper meaning behind Henry Paulson's words.
Normally, the Nasdaq IPO process takes at least six months to a year and a half. However, if you go through some special channels, find the right people, and use the right methods, there are cases where you can successfully ring the bell in two or three months.
Within seconds, Morgan Stanley's CEO spoke first, "Henry, are you planning a short-selling attack on YueDong Games?"
Top tycoons only use a few methods to fleece retail investors: collusion to manipulate the market, wash trading, and short selling attacks. They've mastered these three techniques to the point that they can operate with their eyes closed.
Joint stock manipulation is quite simple. First, several oligopolistic institutions conspire privately to jointly purchase a large amount of funds in a certain stock or sector. Then, they spread positive news through various channels, such as a company about to launch a revolutionary product, a company's profits increasing significantly, or the Federal Reserve preparing to cut interest rates.
Then they concentrated their funds to buy continuously, gradually raising the stock price and creating the illusion that the stock had a bright future, with the aim of attracting ordinary investors to follow suit and buy.
Once ordinary investors are lured in and frantically chase the high prices, they secretly sell their shares and quickly cash out and leave the market.
After they left the market, most investors remained unaware and foolishly continued to chase the rising prices until the bubble burst and the stock price plummeted. Only then did they realize what had happened, but by then they had already lost everything.
Henry Paulson's statement about pushing the stock price of Leap Games higher is essentially a form of stock manipulation.
The second way to profit from retail investors is through wash trading, which is an even more reliable method.
It's important to know that brokers don't need to pay intermediary fees when buying and selling stocks themselves, since they are intermediaries and control the stock trading channels.
Moreover, all stock transactions must be completed through brokers, which gives them room to manipulate the market.
As long as several brokers reach an agreement, they can submit buy and sell orders on their respective trading seats, and then buy and sell to each other, you sell to me, I sell to you, and so on.
In this way, the stock trading volume appears huge and the price is constantly rising, but in reality, these transactions are fake. The purpose is to mislead ordinary investors into thinking that the stock is very popular, so that they will follow suit and buy it.
Once investors have entered the market, they then sell off their holdings, reaping a windfall from the retail investors.
This method usually arises when people want to sell stocks with low prices, and such an understanding is formed.
Of these three methods, short selling is the most ruthless and was Henry Paulson's real objective this time.
A short-selling attack is a continuous sell order placed to exert downward pressure on a stock, causing its price to fall.
When the stock price hits rock bottom and ordinary investors panic and sell off their shares, they take the opportunity to sell their short positions, passing the hot potato to others so that others can take over.
This method not only allows for quick profits but also severely damages the companies being shorted, going beyond mere profit-making.
That's why it's said that if the stock market is a casino, then brokers are the sexy dealers, not only dealing cards online but also playing themselves.
They still hold tools in their hands, making it impossible for ordinary investors to compete with them.
However, the consequences are even more severe for the companies that are targeted by short sellers.
A drop in stock price and a decrease in market value are minor issues; the biggest concern is losing investor confidence.
Once investors lose confidence in a company, the stock price will not only fail to reach new highs, but it will also take a long time to recover to its previous level.
This will have a significant impact on the company's subsequent financing. In severe cases, it may disrupt the company's development plan and even lead to a crisis of broken capital chains.
Seeing the knowing looks on everyone's faces, Henry Paulson stopped beating around the bush and directly nodded in admission, "That's right, I wanted to launch a short-selling attack."
"Gentlemen, we've been a force to be reckoned with on Wall Street for so many years. Are we going to keep letting that Ernst guy lead us by the nose? It's time to show him who the real uncrowned king of Wall Street is."
The atmosphere in the meeting room became heavy again at the mention of Ernst.
In the past, none of Ernst's companies were publicly listed, so even if they were dissatisfied, there was nothing they could do.
They couldn't interfere with Ernst's high valuation of the company or the company's development direction after financing.
Chun Chun is just a loser who gets strung along by a goddess and spends all his money, but can't even touch her hand. That's pretty frustrating.
Especially YueDong Games, whose gross profit is frighteningly high and has virtually no GG expenses, should theoretically have a lot of working capital.
However, most of this money was invested by Ernst in a special effects company called Yaodong, ostensibly to develop a game engine.
To these Wall Street bigwigs, this is nothing short of a joke, a complete charade.
Developing a game engine? Can't our own company develop it? Why do we have to spend money to develop it with another company?
Everyone knows the real purpose of that special effects company, Yaodong.
Henry Paulson felt that Ernst had gone too far. If things continued like this, who knew what he would do with Wall Street's money in the future? So he had to find a way to curb Ernst's arrogance.
A silence fell over the meeting room; no one nodded in agreement with Henry Paulson's proposal. After all, Ernst owned more than just Jump Games.
Google and MGM go without saying; although they are currently highly sought-after companies in the market, they are unlikely to receive another round of funding.
But he also has PayPal, which is widely regarded as a promising venture but has yet to receive funding.
And who can guarantee that Ernst won't start other companies in the future?
To take a recent example, there's that mysterious Sun God Research Institute. Nobody on Wall Street knows what it's up to yet, and who knows what kind of enormous wealth it might hold.
And then there's Wenger's recent acquisition of IMDB in London. Anyone with a discerning eye knows that Ernst will definitely have more to do next.
Is it worth it to offend Ernst now?
What if Ernst holds a grudge and deliberately avoids them when his company seeks financing in the future? Wouldn't they miss out on a lot of money-making opportunities?
The key question is what the shareholders will think? We'll be the ones under pressure then.
Henry Paulson, seeing the hesitation in everyone's eyes, knew their concerns.
He smiled slightly and said unhurriedly, "Ladies and gentlemen, the heads of most of the major financial institutions on Wall Street are sitting here today. Do you really think that Ernst's corporate financing can completely avoid us in the future?"
These words were like a flash of inspiration, instantly enlightening everyone present.
Everyone's eyes lit up. That's right! If everyone offends Ernst, wouldn't that be the same as no one offending him?
Ernst's company is large and requires a huge amount of capital. Small and medium-sized financing institutions simply cannot offer the right price or provide that much money. Therefore, his company ultimately has to seek financing from large institutions like these.
At that time, everyone will still be on the same starting line, and no one will suffer a loss.
Even after understanding this, everyone still hesitated.
They glanced at each other, neither willing to be the first to agree.
The nail that sticks out gets hammered down. If he were to express his opinion first, and the news got out, Ernst would definitely be the first to come after him.
Henry Paulson wasn't in a hurry, seeing everyone dawdling around.
He waved his hand, and the secretary who had been waiting immediately came in, carrying a rather ordinary-looking cardboard box.
"Since no one wants to speak first, let's try a different approach: anonymous voting."
This is something he learned from Ernst: if no one wants to speak first, then neither of them should speak.
The secretary placed the cardboard box in the middle of the conference table and then distributed slips of paper and pens to everyone.
The bigwigs in the meeting room looked at each other, and finally picked up pens and wrote down their choices on slips of paper.