March 1, 2000.
America Online (AOL), the largest internet new media company of the new era, officially completed its merger with Time Warner Group, the largest traditional media company.
This acquisition was initiated by America Online, with a total acquisition price of 181 billion US dollars in cash and stock.
This was the largest acquisition in the history of the United States, and even the world!
All forms of media were integrated into this largest media company in the world.
Both the media industry and the internet industry generally favored this model of combining old and new media.
People generally believed that internet companies needed attractive content, while traditional media needed the internet, the most promising new media platform of the 21st century. The merger of America Online and Time Warner represented the future development direction of the media industry: the combination of channel service providers and content providers, signifying the possibility of integrating traditional and modern industries.
However… the seemingly bright prospects were replaced by a winding road of merger.
In February 2000, before the merger of the two companies was announced, America Online's stock price was $73 per share, and Time Warner's was $64.
A month later… as of March 1, Time Warner's stock price rose to $81, while America Online's stock price fell to $58.
This differential performance stunned many people.
"How is this possible?"
"Indeed, the stock market performance of the two companies is far below market expectations."
"I wonder if you've noticed? In February, internet stocks, tech stocks, and new media stocks were hard to come by in the market. But now? There are quite a few circulating shares, but the number of buyers is far lower than in February."
"Why is there such a huge difference between before and after?"
Many people noticed something unusual.
That's right, many investment institutions on Wall Street were selectively selling off stocks!
Kyle was waiting for the financial reports of major listed companies to be released, and in fact, major investment banks on Wall Street were also observing.
Compared to individual investors and small investment banks,
Lehman Brothers, Goldman Sachs, Morgan Stanley, Bear Stearns, and Merrill Lynch, the five major investment banks on Wall Street, had very broad sources of information and could obtain many insider tips that others could not.
"It's going to be bad~"
"The profit and loss performance of many listed companies on Nasdaq is far from matching their current market capitalization."
"In other words, the amount of water injected here is too high, many times higher than the critical line~"
As the five major investment banks on Wall Street, they keenly detected the danger on Nasdaq and began to sell off a batch of stocks in advance. This led to the number of circulating shares in the market being far higher than the demand.
Gale Capital.
"Boss, did you see it?"
"America Online's stock price has fallen quite a bit recently."
"Even the stock price of America Online-Time Warner, the newly formed largest media company in the world after the merger, is hovering between $39 and $45, far below market expectations."
Andy Czelop said playfully.
Kyle nodded with a solemn expression.
Andy continued, "Perhaps the combination of the two new and old media companies is inherently a failed case."
Upon hearing this, Kyle's solemn expression also showed a hint of a smile: "You're right, I also think the merger of the two companies is one of the biggest failures."
Indeed.
Based on Kyle's prescience as a transmigrator, he knew how miserable the two companies would be in the future.
On March 3, 2002, America Online-Time Warner Company announced its fiscal year report, showing a massive loss of 54.2 billion US dollars, setting the highest record for quarterly losses in American history;
By the end of 2002, the loss reached 98.7 billion US dollars, equivalent to the combined GDP of Chile and Vietnam.
"Tsk tsk tsk~"
Kyle couldn't help but click his tongue, "I've already poached 'Harry Potter,' so Warner's days will probably be even tougher."
In the first few years of 2000, Warner was in chaos from top to bottom due to the failed merger, almost solely relying on "Harry Potter" to hold on...
As time entered March.
America Online's stock price fell;
Internet giants such as Microsoft, Cisco, Oracle, and IBM were affected by antitrust investigations and faced the danger of being broken up;
The five major investment banks on Wall Street began to selectively sell off a batch of stocks;
The number of circulating shares in the market was far higher than in January and February;
All of the above led to the Nasdaq stock market experiencing a slight fluctuation after entering March. However… even with the increase in negative reports, it failed to stop the continuous rise of the Nasdaq index, breaking historical records again and again.
On March 1, the Nasdaq index reached 4810 points;
On March 2, the Nasdaq index reached 4852 points;
On March 3, the Nasdaq index reached 4879 points;
Repeatedly breaking history made countless investors even crazier.
"Making money," "getting rich," "buying internet stocks," etc., became common topics of discussion among American citizens recently.
But!
But on March 4, a slight change occurred.
— e-Toys, Inc. released its financial report for the previous quarter.
It was a famous online toy sales company, founded in 1997, with its main business being the sale of various toys through its website.
In the internet boom of 1999, the company's stock was listed on Nasdaq, and its total market value reached 8 billion US dollars at the opening, far exceeding the 6 billion US dollar market value of the old-established toy company R-Toys, shocking the entire industry.
However… in fact, R-Toys' operating performance was much higher than the former.
In 1998, the former's sales were only a mere 30 million US dollars, while the latter's reached 11.2 billion US dollars, almost 400 times that of the former. In terms of profitability, the former lost 28.6 million US dollars in 1998, while the latter earned 376 million US dollars.
The fundamentals of the two differed so greatly, yet their stock prices were inverted… On this day, e-Toys, as a Nasdaq-listed company, was obligated to disclose its previous quarter's financial data to all American shareholders.
Previous quarter's revenue was 10.1 million US dollars;
Did it make money?
Made nothing!
Not only did it not make money, e-Toys actually lost 88 million US dollars in the previous quarter, several times higher than the 28.6 million US dollar loss for the entire year of 1998.
"This, this, this… this performance is too poor!"
e-Toys' terrible performance stunned many people.
"With this performance, let alone a market value of nearly 10 billion US dollars, it's not even worth 100 million US dollars!" An investor who had heavily invested in e-Toys' stock looked desperate.
Everyone understood one fact—e-Toys was in trouble, it was doomed!
Sure enough, e-Toys' stock on that day suffered a massive sell-off by investment institutions and individual investors.
Stock price collapse!
In contrast, the Nasdaq index was not significantly affected.
However, as one Nasdaq-listed company after another successively released their previous quarter's financial reports, many people suddenly looked bewildered.
Loss!
Loss!
Still a loss!
Even Yahoo, a leading internet portal company, had profit performance far below expectations, with only 14 million US dollars in profit in the previous quarter.
This profit might seem okay, but don't forget, Yahoo's market value is over 43 billion US dollars!
Its profit level was far from matching its 43 billion US dollar market value.
"Market value excessively inflated?!"
Immediately, this phrase popped into many people's minds.
On March 9, the Nasdaq index broke through the 5000-point mark;
On March 11, it even set a new record of 5048.6 points.
"Phew~"
Many people breathed a sigh of relief and laughed, "Although the performance of many listed companies is far below market expectations, Nasdaq is still relatively strong. Look, it has already broken through the 5000-point index."
However, the major investment institutions on Wall Street were not as overjoyed as those dizzy investors, instead, they all cried out in alarm!
"This is bad, the stock market is going to crash!"
"Today is Friday, the stock market won't open again until Monday. I hope there will be good news in these two days, otherwise… otherwise… a large number of people and investment companies will be ruined!!!"
Many executives of investment institutions were dripping with cold sweat.
The severity of the situation completely exceeded their expectations.
Companies whose true market value should only be around 100 million US dollars were hyped up by the era to market values of billions or tens of billions of US dollars;
The Nasdaq index broke through the 5000-point mark in just a few years;
In 1999 alone, the number of internet companies listed on Nasdaq exceeded the total of the previous decade.
All of this, coupled with the recent release of financial reports from major companies, and the bad news, turned Nasdaq into a huge powder keg ready to explode at any moment.
"I hope everything goes smoothly when Monday, March 13, arrives, otherwise… it will inevitably trigger a global shock."
A bad premonition, like a huge dark cloud, enveloped the hearts of many people.