Chapter 108

Yu Xing spent two days in anticipation, constantly monitoring and contemplating Fen Zhong’s stock price movements.

Although Fen Zhong’s stock fluctuated around $15, it was not influenced by Guo Shanfeng—it remained driven by broader economic conditions and market shifts.

Throughout 2008, Fen Zhong’s stock continued to decline; its peak price in November 2007 had been $65.1, with a market cap nearing $8 billion, but after the financial crisis, its already slow downward trend pushed the price to $20, reducing its market cap to just over $2 billion.

By January this year, Fen Zhong’s stock had failed to hold its support level, slipping into the $15+ range, and its market cap had fallen below the $2 billion mark.

Such a steep drop made the negative reports from unknown Hong Kong research firms and a few media outlets seem insignificant—there was virtually no market reaction, and no official response whatsoever.

“Xiao Ying, seeing Fen Zhong plummet like this, I wonder if even without shorting, we could just buy PUTs and still profit…” Yu Xing said helplessly during his call with Liu Wan.

“Are you going to talk trading strategies with someone who lost a lot in the financial markets?” Liu Wan asked Yu Xing’s opinion.

Yu Xing chuckled: “Don’t underestimate yourself—it’s the market’s fault, not yours.”

Liu Wan, unusually worried, said: “Logically, once our detailed research report is released and our U.S. counsel contacts the SEC, Fen Zhong’s stock should drop—but I’m now worried it’s fallen too far already, leaving little profit to be made.”

Yu Xing declared firmly: “Impossible!”

Liu Wan asked: “What’s your insight? Did you fully understand the formulas I sent you?”

“I didn’t fully study them, but logically, I can see Fen Zhong still has over a billion dollars in market cap—if there’s financial fraud, how could it remain unaffected?” Yu Xing expressed confidence. “You’re overthinking because you care. Even if the SEC stays silent before the New Year, it will act after.”

Liu Wan fell silent for a moment, sighing softly: “True, that’s logical—but if the SEC does nothing, I’ll be anxious all through the New Year. My PUTs expire March 20; the timeline is still plenty.”

PUTs are put options, a common tool for short-selling profit, and they are a right, not an obligation.

That is, once purchased, they grant the right to sell a specific stock at a predetermined price and quantity within a set time frame.

For Fen Zhong’s PUTs, Liu Wan bought them from a broker, agreeing to an expiration date of March 20, a strike price of $12.5, and paying an option premium of $2.5 per share.

This means no matter how low Fen Zhong’s stock falls, she can still sell at $12.5.

If Guo Shanfeng’s actions trigger a sharp drop to $5, the process is: Liu Wan buys the stock on the Nasdaq market at $5, then sells it back to the broker at $12.5, earning $7.5 profit per share.

In practice, Liu Wan doesn’t need to buy the stock herself—the broker automatically handles the settlement, and she receives only the cash difference.

Buy PUT → stock price drops → exercise → profit. Liu Wan doesn’t need to own the stock; her only cost is the option premium.

Fen Zhong’s option premium is $2.5 per share; one standard PUT contract covers 100 shares, costing $250 total.

At the current $15 stock price, this $250 controls $1,500 worth of 100 shares—a low-cost bet for high returns.

But the future of stocks is always uncertain—if the PUT isn’t exercised or traded before expiration, the $250 is lost.

What Guo Shanfeng is doing now is suppressing the stock price to create room for profitable exercise.

Yu Xing received a detailed explanation from Liu Wan, even including BSM model formulas arguing the broker’s PUT pricing was unreasonable—but it was overly complex.

He was happy to learn new knowledge, but the BSM model’s short-term Treasury rates, annualized volatility of the underlying asset, cumulative distribution function of the standard normal distribution… always made him want to refocus on company affairs.

“Raising capital isn’t as easy as I thought, but Shen Nanpeng from Sequoia replied to me—maybe we can still negotiate before the New Year,” Yu Xing confided in Liu Wan. “But now that Guo Shanfeng has moved, Xiao Ying, have you considered forming your own equity private fund like Shen Nanpeng or Xu Xin?”

Liu Wan laughed in disbelief: “Your ideas keep changing every few weeks—aren’t you done pushing me to start a small consulting firm? Now that you’ve seen investors in action, you want me to do this instead?”

“I hadn’t seen them before, but now I have—they’re decent, but not that impressive,” Yu Xing smiled. “After meeting Xu Xin, my first thought was: what’s missing from my Xiao Ying?”

Liu Wan said bluntly: “No interest. No resources.”

“If we profit from Fen Zhong and can’t find a second target soon, what will you do with your money? I think you should try,” Yu Xing urged. “Or if you’re not interested, I’ll follow Shen Nanpeng’s example and start my own fund—you’ve got the money, will you be my LP?”

LP stands for Limited Partner—a partner who provides capital to a private fund.

Liu Wan thought for a moment: “If I make big money, I’ll invest some in you as an LP.”

“LP, hello,” Yu Xing said seriously. “Are you spending the New Year at my place?”

Liu Wan was baffled—how had the conversation shifted from career planning to holiday arrangements so suddenly?

After a moment’s recollection, she sighed: “You confusing abbreviations like that is really boring.”

“Is it? If you won’t be my LP, I’ll have my Master introduce me to one,” Yu Xing grinned. “Xiao Ying, do you look forward to the moment our short succeeds?”

Liu Wan suddenly remembered—they had once joked about dating only after the short succeeded.

She retorted: “Aren’t you waiting for my brother to introduce you?”

“Right—I’ll learn from Shen Nanpeng, start a fund, have my Master introduce me LPs, then invest the money in Bai Xiaosheng,” Yu Xing teased. “If the short succeeds and your money has nowhere to go, why not invest it in Bai Xiaosheng? Don’t you look forward to that?”

“Yu Boss, I get it now—you’re pushing me to start a fund just so you can get your hands on my money before we’ve even succeeded,” Liu Wan realized. “I just wonder—does your mouth actually work with investors?”

“Of course it does! Xiao Ying, I’m certain this short will succeed—no one has a more solid grasp than me, staring at screens all day,” Yu Xing said seriously. “If I wanted, I could’ve raised money from Xu Xin days ago. Shen Nanpeng even said he’d take a look. Think about it—if you invest, you’re backing a project already vetted by Xu Xin and Shen Nanpeng.”

He laid out his plan: “If Today Capital and Sequoia won’t give me the price I want, I’ll use the money from Fen Zhong first, then come back to them in the next round.”

Liu Wan laughed in disbelief: “So now this is already a project vetted by Xu Xin and Shen Nanpeng? When you meet other investors next round, will you use this as your pitch?”

“What’s wrong with that?” Yu Xing said confidently. “Today Capital just needs my signature.”

Liu Wan pondered: “Are you really going to put your short profits into this? I invested in the angel round, but… are you really that confident Bai Xiaosheng will succeed?”

“Even if it never goes public, early-stage capital still generates returns,” Yu Xing declared firmly.

Bai Xiaosheng’s model has no flaws.

This can be seen from Maimai—though unlisted, it raised $200 million in its Series D at a valuation exceeding $1 billion, far surpassing Bai Xiaosheng’s current worth.

Advertising, users, recruitment—the revenue structure is clear.

Moreover, in the coming years, there will be a massive shift from PC to mobile.

Yu Xing believed that as long as he grasped this model and direction, he couldn’t possibly fail to recoup his investment—even if he couldn’t create something new, he could simply sell the company like Guai Ai Wang and still achieve cold financial freedom.

With such a safety net, as the company grew, user base expanded, experience accumulated, and team expanded, Yu Xing’s ambitions grew too.

Seeing silence on the other end of the line, Yu Xing probed: “How about this—you’re idle over the New Year anyway—shall I send you a term sheet?”

The proper procedures still needed to be followed.

Liu Wan set aside her thoughts and ended the call: “Have your Master introduce you to an LP. Let the LP read your term sheet.”

Yu Xing put down his phone, thinking that without work, Xiao Ying had become more temperamental.

He pondered the short and fundraising for a while, then waited for Zhong Zhiling, the third-in-command, to return from field promotion.

Zhong Zhiling hadn’t rested since returning to Shanghai—he’d focused entirely on targeted promotion, hoping to add even a sliver of weight to the company’s fundraising efforts.

He walked into the CEO’s office and the first thing he saw was the whiteboard covered in formula derivations.

“Huh? Brother Xing, what’s this?” Zhong Zhiling said after a few seconds, puzzled. “Is that the cumulative distribution function of the standard normal distribution?”

“Oh, the one who got recommended for grad school has arrived,” Yu Xing laughed. “Your math is solid.”

“It’s a special normal distribution—mean 0, standard deviation 1. I almost majored in math,” Zhong Zhiling sat down and handed over his work report.

Yu Xing flipped through it casually—it showed the latest week’s field promotion results across five cities: 150–200 new users per day on average.

With the New Year approaching, Bai Xiaosheng needed to draft a rough plan for next year’s work.

“Once our funding arrives and we combine it with brand promotion, your work will get easier,” Yu Xing said. “Hmm, let’s all work overtime tomorrow—discuss recent progress. Your work is definitely qualified, the website’s operational atmosphere is good, and Xiao Ying’s work is qualified too.”

With user growth and stability, much of the content emerging on Bai Xiaosheng last week had been year-end bonus and New Year goods comparisons.

This was exactly what Yu Xing wanted—and what Lu Haiying had been pushing for.

Although positioned as a workplace social and topic platform, Bai Xiaosheng’s main actions since launch had been “workplace topics”—successfully launching major discussions on “college graduate employment,” “internet dating industry,” and “layoffs and insurance,” growing its user base to over 100,000.

User activity spiked during these major topics, then clearly dropped off.

Bai Xiaosheng’s key task now is to shift toward common, smaller topics and cultivate organic user social interaction.

The New Year is a perfect opportunity—year-end bonuses, New Year goods, post-holiday job-hopping—these topics matter deeply to professionals, aren’t explosive like major topics, but are enough to sustain solid daily active users.

This is a healthy sign of website growth, and like the annual “college graduate employment” topic, it has continuity.

Lu Haiying had already planned related events: New Year, spring recruitment, autumn recruitment, Mid-Autumn Festival, user-favorite company polls, most-hated company rankings, industry salary revelations, and more.

Combined with topics easily triggered by anonymity, the website’s user engagement soil and traffic mechanism were taking shape.

“Feng Ge? He bled for the company—his work is qualified. His girlfriend just arrived, and his budget hasn’t been allocated—no need to evaluate him.”

“When we tally it up, it seems my work isn’t qualified enough—we still haven’t raised the funding.”

Yu Xing reflected.

Zhong Zhiling quickly said: “Brother Xing, without your guidance, how could our work be qualified? If they won’t invest, it’s their loss.”

Yu Xing gave a thumbs-up, preempting: “Xiao Ying is also helping us find money. If Today Capital and Sequoia don’t offer good terms, we don’t have to rush to take their money.”

Zhong Zhiling vaguely sensed this was the real point of his senior’s words.

He hesitated slightly, then asked: “Brother Xing, is there bad news from Today Capital and Sequoia?”

Yu Xing shook his head: “No. Still waiting.”

His words had barely ended when his desk phone buzzed—a message from Shen Nanpeng of Sequoia, inviting Bai Xiaosheng’s team to meet, but the location was unexpectedly Today Capital’s office.

“Alright, new news—Shen Nanpeng wants to meet,” Yu Xing thought for a moment. “But why at Xu Xin’s office? Are they close? Did they coordinate ahead?”

Zhong Zhiling had no answer.

Yu Xing didn’t expect one—he simply felt that under this situation, Shen Nanpeng’s valuation would be capped.

He casually analyzed the possible coordination between the two firms.

Zhong Zhiling asked anxiously: “So what do we do?”

“The worst-case scenario is $2 million for 30% equity—that’s acceptable,” Yu Xing said slowly. “But I’m aiming for $3 million for 20%. If we can land near the upper end, fine. If they refuse entirely, it’s a bit…”

The upper and lower valuation estimates differed by more than double.

He thought for a long while, then said: “We’ll see how the meeting on the 18th goes—if they raise their offer, we’ll have a good New Year. If they don’t budge at all, we’ll delay until after the holiday…”

If Xiao Ying’s side delivers results, then whoever wants to invest can wait for the next round.

Shen Nanpeng scheduled the meeting for January 18—just one week before the New Year. Liu Wan’s U.S. counsel would act on January 17 U.S. time, and Guo Shanfeng’s official website would soon release the full research report.

Yu Xing exhaled, slapping his desk with his right hand: “There are plenty of domestic institutions—they can’t turn a dollar into two. No rush!”

No rush—Today Capital and Sequoia China are in sync, and over there, Fen Zhong is still waiting for their investment!