Tech Giants: Starting from Bankrupt Companies

199: Chapter 199 The Retail Investor FrenzyShenzhen, Nanshan District, Tencent Building.

28-year-old programmer Xiao Zhang was at his workstation pretending to work, while actually constantly refreshing his stock account.

He had subscribed for 5,000 shares of the new Spark Electronics stock—requiring 500,000 rmb to be frozen. He had worked for five years, had 300,000 rmb in savings, and borrowed another 200,000 rmb from his parents, putting it all on the line.

The winning rate was only 0.5%, very low.

But he wanted to take a gamble.

This time, Spark Electronic Technology raised 400 billion rmb; institutions subscribed for 350 billion, leaving only 50 billion for retail investors, as retail investors couldn’t handle any more.

9:30 AM, the bell rang.

9:31 AM, the stock price was 105 rmb.

Xiao Zhang’s heart was pounding wildly.

9:45 AM, the stock price was 110 rmb.

He couldn’t hold it anymore and refreshed the lottery result inquiry page.

The page lagged—the traffic was too high.

Refresh, refresh, and refresh again.

Finally, the page popped up:

[New Stock Subscription Result] [This is a fictional world; in the real world, subscription results are announced a month in advance. Please don’t flame me.]

Stock Name: Spark Electronics

Subscription Quantity: 5,000 shares

Winning Quantity: 500 shares

Winning Rate: 0.5%

He won!

Xiao Zhang stood up abruptly, his chair hitting the partition behind him.

”What’s wrong?” a colleague asked.

”I won! 500 shares!” Xiao Zhang’s voice trembled.

”Holy cow!” The whole team gathered around.

”How many shares?”

”500!”

”You’re rich!”

Xiao Zhang calculated: 500 shares × 115.5 rmb = 57,750 rmb. The 500,000 rmb subscription capital was only tied up for a few days, with interest costing a few hundred.

Net profit... about 7,500 rmb.

Although it wasn’t much, it was free money.

”I’m treating tonight!” Xiao Zhang said generously, ”Seafood buffet, 88 rmb per person, the whole team is invited!”

”Boss Zhang is mighty!”

Similar scenes were playing out all over the country.

On the Chinese microblogging platform, winners were flooding the feed with screenshots of their results:

@BeijingMom: ”Won 1,000 shares! My child’s tuition for international school next year is covered! Thanks, Spark!”

Image: Screenshot of stock account, 1,000 shares won.

Comments:

”Soaking up the good luck”

”Mom has such good luck”

”Spark is benefiting the whole nation”

@ShanghaiRetiredGrandpa: ”I took 800,000 rmb of my pension to subscribe for new shares, and won 2,000 shares! Earned 30,000 rmb in one day!”

Image: Photo of the grandpa at the securities business hall, smiling happily.

@ChengduProgrammer: ”Won 500 shares. Although it’s not much, this is the first time I’ve won a new stock. I feel connected to Spark—even though I’m just a small shareholder, I feel like I’m on the same team as those engineers making chips.”

This post on the Chinese microblogging platform was reposted 50,000 times.

Many people felt the same way: by buying Spark’s stock, they became a member of Spark. When the company makes money, they get a piece of the pie too.

This is true ”common prosperity”—not egalitarianism, but allowing those who work hard, those with vision, and those who take risks to receive the returns they deserve.

Of course, there were those who didn’t win.

The stock forums were filled with wailing:

”Once, an opportunity to get rich quick was placed before me, but I didn’t have the money to subscribe...”

”I subscribed for 10,000 shares and didn’t get a single one. Crying.”

”To the person above, at least you had the money to subscribe. I couldn’t even scrape together 500,000 rmb.”

But there was more anticipation:

”It’s okay, Spark Semiconductor will be listed soon too!”

”Spark Materials, Spark Power... they’re all in line!”

”I’m sticking with Spark for the rest of my life!”

Over the next five days, Spark Electronics’ stock price stayed in the green.

April 2, Monday.

Opening: 116 rmb.

Institutions kept buying, and retail investors were reluctant to sell.

Closing: 118 rmb, up 2.2%.

April 3, Tuesday.

Opening: 119 rmb.

Brokerage issued a research report: CICC gave a ”buy” rating with a target price of 150 rmb.

Closing: 120 rmb, up 1.7%.

April 4, Wednesday.

Opening: 121 rmb.

Breaking through the 120 rmb psychological barrier, technical traders followed suit.

Closing: 122 rmb, up 1.7%.

April 5, Thursday.

Opening: 123 rmb.

China Asset Management announced the establishment of the ”Spark Themed Fund,” with a scale of 20 billion rmb, specifically to invest in Spark-affiliated companies.

Closing: 125 rmb, up 2.4%.

Five days, from 100 rmb to 125 rmb, an increase of 25%.

Market capitalization reached 2.5 trillion rmb.

This meant that the market capitalization of Spark Electronics alone exceeded 10% of the total market capitalization of the ChiNext board on the Shenzhen Stock Exchange.

It created countless wealth myths:

Early investors: Shenzhen Capital Group invested 500 million rmb three years ago to buy into the parent company of Spark Technology; it is now worth 25 billion rmb, a 50-fold return. As the parent company, Spark Technology holds 80% of the equity in Spark Electronic Technology.

Employee stock ownership: Spark Electronics employees hold an average of over 2 million rmb in dividend-paying shares.

Winning retail investors: Average profit of 25%.

On the afternoon of April 5, Su Chen accepted another interview.

The reporter asked, ”Mr. Su, Spark Electronics’ market cap has reached 2.5 trillion rmb. Do you have anything to say?”

Su Chen looked at the camera: ”The stock price is the market’s recognition, but our focus will always be on products. I will make an announcement here: this September, the Huaxing HX2 will be released—equipped with our self-developed 14nm chip, ’Flint 3.’ That is the real hard power.”

”How is the performance of the Flint 3?”

”It’s a 40% improvement over the flint no. 2, with 30% lower power consumption. For the specifics, see you in September.”

After the interview aired, Spark Electronics’ stock price rose another 2%.

The market voted with its feet: to believe in Spark is to believe in the future.

Spark Electronics’ successful financing also set a precedent for other sibling companies, getting things off to a good start, with Spark Power and Spark Materials scheduled to list in the second half of the year.

This 400 billion rmb financing for Spark Electronic Technology will be used in three major areas. First, it will ramp up the consumer electronics product line, releasing desktop computers, laptops, tablets, and LCD TVs. Second, it will establish big data and cloud servers to widen the company’s moat. Finally, it will deepen R&D investment in smartphones, smart wearables, and health technology, increase production capacity, and begin global operations.