Rebirth of England

"BOSS, I met with Netflix CEO Mr. Hastings today. He said that Netflix can accept financing, but not now, at least not at their current stock price..."

According to Barron's previous instructions, Daisy went to the United States to meet with Netflix CEO Hastings.

At this time, DS Capital holds nearly 8.62% of Netflix's shares and can be said to have become one of the company's major shareholders.

From Daisy's phone call, Barron learned that Hastings also hoped that Netflix could raise funds at this time to better cope with the Internet winter at this time, but he did not hope to do so before this time. Additional shares are issued at a price of $6.

In Hastings' view, Netflix's stock price is completely undervalued and has been affected by the sharp decline in Nasdaq technology stocks in the third quarter of this year.

Therefore, if DS Capital wants to invest in Netflix, it must either wait until its stock price returns to a price that Hastings believes is reasonable, or it can accept the additional shares issued by Netflix at a reasonable price.

Daisy's call was to ask what Barron's decision would be in the face of such a situation.

So since Netflix's stock price is at a low level now, why doesn't DS Capital directly purchase Netflix's outstanding shares in the stock market?

There is certainly a reason for this.

When Netflix went public, its stock was issued at $15 and its market value was $450 million.

But now its stock price once fell below $5, reaching an all-time low of $4.83, and now, after DS Capital bought a large amount of Netflix stock, its stock price has only exceeded $6 - and then fell slightly.

The problem is that there are only so many outstanding shares of Netflix, and those who were willing to sell their shares at the time have already sold them - most of which were acquired by DS Capital.

There are not many Netflix stocks on the secondary market now. Under such circumstances, if DS Capital buys a little more, its stock price will immediately be raised very high.

If you want to hold more shares of Netflix, you can only directly invest in the company and obtain its private placement shares.

Daisy also mentioned that when DS Capital increased its position in Netflix stock, it had already alarmed Netflix because it had reached a 5% holding ratio.

Although they said at the time it was just a financial investment and had no intention of acquiring Netflix.

But now that it continues to increase its stake in Netflix, Hastings will also be worried that DS Capital has more ambitions.

Under such circumstances, in order for Hastings to agree to issue additional shares to DS Capital, in addition to reassuring it, it is nothing more than giving up the voting rights to hold the shares, which is just a pure financial investment.

In addition, you also need to consider what Hastings said, "give him a reasonable price"!

"Promise him, Daisy."

Barron's decision did not exceed Daisy's expectations. Before she came to the United States, the two had discussed this strategy for Netflix.

“So what price do we give them?”

"You told Mr. Hastings that I could accept their private placement of stock at $10 per share. Now you need to know how much money he wants."

“At US$10, this is a huge increase compared to Netflix’s current stock price of around US$6!”

Facing Daisy's question, Barron said calmly:

"This is not the point, Daisy. We are originally a long-term investment in them. I am optimistic about Netflix."

Anyway, Barron knows that by the end of this month, Netflix's stock will rise back to above $10.

At that price, I'm afraid I still won't be able to buy many Netflix shares. It would be better to obtain shares directly from their private placement.

After Barron made the decision, Daisy discussed with Hastings again and finally decided:

DS Capital will inject $21 million into Netflix and obtain 2.1 million Netflix shares from a private placement of $10 per share.

In this way, after the capital injection, DS Capital will hold a total of 4.686 million shares of Netflix, accounting for 14.6% of the company's total share capital.

It can be said that Daisy's main purpose of going to America this time has been achieved, but her other purpose was rejected.

Originally, Barron asked her to stop by and ask Google if it needed financing, but the other party refused without hesitation and did not even meet their founder...

Barron had already anticipated this, but it can only be said that he acted too late.

Google was founded in 1998. At the beginning, it only received $100,000 in private investment.

The next year, on June 7, 1999, Google conducted a new round of financing. It can be said that this financing set a record - not that the amount of financing was high, but that they had obtained the Silicon Valley The two most famous venture capital institutions KPCB and Sequoia Capital raised US$25 million in financing.

These two top VC companies have been competing fiercely and have never invested in a company at the same time before. This shows how important Google is in their eyes.

In the original time and space, this was the only financing before Google went public. Under the escort of these two top VC companies, Google successfully went public in 2004, beginning its history as an Internet giant.

…

Of course, even in England, DS Capital was not very famous at this time, let alone on the other side of the ocean in the United States. It was not a surprise that Google rejected it.

As the saying goes, what you lose is what you gain. Although the idea of ​​investing in Google is temporarily unfeasible, in China, Amber brought good news, that is, Baidu's boss Li agreed to their investment.

Previously, Baidu only raised funds twice when it was founded, in February and September 2000, with financing amounts of US$1.2 million and US$10 million respectively.

In the financing in September 2000, two investment companies, DFJ and IDG, purchased 9.6 million shares of Series B convertible preferred stock at $1.04 per share.

This time, DS Capital directly increased its price by nearly three times and decided to purchase 5 million convertible preferred shares at a price of US$3 per share, investing a total of US$15 million in Baidu.

According to the agreement, when Baidu is listed, the convertible preferred shares held by DS Capital can be converted into ordinary shares of Baidu at a ratio of 1:1.

This is where Boss Li differs from the other two at BAT. Before the company went public, he only raised funds through convertible preferred shares, so that investors could not shake his control over the company.

After the listing, Baidu will definitely implement AB shares, Class B shares with more voting rights. Boss Li will still be able to firmly control the company.

Barron is still very satisfied with this result. He knows that when Baidu goes IPO in the United States in the future, the issue price of the stock will be US$27.

But on the opening day, the opening price of Baidu stock was as high as $66, and its closing price that day was as high as $122.54!

The preferred shares purchased by DS Capital for US$3 per share can be converted into ordinary shares at a ratio of 1:1 - an increase of more than 40 times, which is satisfactory enough.

However, the investment in Baidu will also be a long-term investment, because Barron knows that after Google withdrew from the Chinese market, Baidu's stock price once skyrocketed to nearly 700 US dollars per share. At that time, it was the best time to reduce its stock holdings. good time.