If the final closing price was $48 per share, with a total market capitalization reaching $480 billion, then even though the price was still below the initial offering, it was still considered a perfect performance by Wall Street.
After all, the US stock market is not like the Chinese stock market, where as long as a company dares to list, it will experience a daily limit increase on the listing day, followed by continuous daily limit increases, with even the worst stocks having to hit five or six consecutive daily limit increases before stopping.
This is not to say that Chinese stock investors are generally stupid and fond of chasing novelty, but rather it is determined by the rules of the Chinese stock market.
China's consistent philosophy for stock listings is to prioritize stability and investors. Therefore, the pricing power for stock listings is generally not in the hands of the company itself, but in the hands of relevant regulatory bodies.
When pricing, regulatory bodies will try their best to lower the listing price to ensure that there are no instances of breaking the issuance price on the listing day. This is to prevent a large number of fraudulent companies from using this method to deceive ordinary investors and cut leeks.
This has led to the generally undervalued listing prices of Chinese stocks, resulting in a high desire for acquisition by financial institutions. Once a stock is listed, there will be a large amount of acquisition, which in turn leads to all stocks experiencing multiple daily limit increases upon listing.
This is also why many large domestic companies dislike listing in the A-share market, with companies like Tencent and Anta choosing to list in Hong Kong.
Firstly, it is definitely because of the strict regulations in the Chinese stock market, which makes it difficult for these companies to engage in flashy financial maneuvers to make money.
Secondly, the issuance prices for listings are generally too low, which means that the financing obtained by a company listing on A-shares might only be half of that obtained in Hong Kong. In such a situation, only fools would be willing to list on A-shares, and anyone with the ability and means would go to Hong Kong or US stocks to list.
In contrast, the regulation of issuance prices in the US stock market is much more lenient. For example, OO Network was able to set its own listing price at $50, which would be absolutely impossible in the A-share market, but it miraculously succeeded on Nasdaq.
However, the American people are not foolish, which has led to many stocks breaking their issuance prices on the listing day. Some stocks even fall by more than 50% on the same day, creating a stark contrast in new stock offerings between the two countries.
Therefore, many financial institutions predicted that OO Network would definitely fall below $40 on its listing day, and even falling to $30 would be understandable. However, the actual result was $48, which was definitely an extraordinary achievement and a great success. A grand celebration party could be held that evening to invite social elites to raise a glass and celebrate.
This stock price should be the value of OO Network recognized by all users. In the future, unless there are major positive or negative news, or a market-wide collapse, the stock price of OO Network will not experience large-scale fluctuations, and will always fluctuate around $48. This is the view of the vast majority of financial professionals.
In the hour before the stock market closed, everyone thought so.
But no one expected that on this day, a shocking piece of news suddenly swept across Wall Street, which was that Shell released its third-quarter financial report.
The release of Shell's third-quarter financial report itself was not a strange thing, as all companies must announce their financial reports on time. However, Shell's third-quarter financial report was highly unusual and attracted immense attention from everyone. It was immediately obtained and analyzed upon its release.
This is because the third-quarter financial report was delayed for an excessively long time.
Everyone could logically deduce that since it was the third-quarter financial report, it should naturally be released in the fourth quarter.
According to Nasdaq regulations, considering the time needed for employees to calculate and coordinate various data, the financial report of the previous quarter is generally released in the second month of the next quarter.
This means that the third-quarter financial report, covering July to September, should be released in November of that year. Whether it was released on November 1st or November 30th, as long as it was within this period, it was acceptable.
However, even on December 1st, Shell had still not released its third-quarter financial report, explaining that its financial system had encountered problems, leading to the loss of some financial data.
Simultaneously, there were varying degrees of trouble in its Middle Eastern operations, and financial data settlements with many governments could not be completed. This prevented the third-quarter financial report from being compiled, and they requested another month's time.
Indeed, many companies occasionally encounter situations where their financial reports cannot be compiled due to various reasons. Therefore, as long as they apply to the relevant regulatory bodies, they can generally receive a certain degree of understanding and tolerance.
The US Securities and Exchange Commission did approve Shell's application for a financial report delay, but this delay was only for one month, meaning the financial report must be submitted by January 1, 2008, at the latest.
Throughout December, Shell was still unable to produce its third-quarter financial report, and it was delayed until January 1, 2008, the first quarter of 2008, with no results still forthcoming.
This led to significant dissatisfaction among many Shell shareholders and investors, resulting in numerous complaints. The US Securities and Exchange Commission could no longer tolerate such blatant delays, and on January 2nd, the commission directly issued a stern letter to Shell, demanding that the company immediately release its financial report within three days, or its stock would be classified as abnormal, trading would be restricted, and Shell would be investigated to comprehensively verify if there were any issues with its financial data.
Under these circumstances, Shell could naturally no longer delay. It waited until January 4, 2008, the listing day of OO Network, and one hour before the deadline, Shell finally released its long-awaited third-quarter financial report.
It is evident that Shell's timing was meticulously calculated.
Firstly, it was one hour before the market closed. At this time, users would no longer be paying attention to the market, so the impact would be relatively small.
At least for retail investors, the vast majority of retail investors who had bought Shell stock would find it difficult to see this financial report within this hour. Moreover, there were no social media platforms or apps then that would allow you to know about major financial changes instantly via your phone.
By the time retail investors saw this financial report, it would likely be after the market closed.
Another point is that on this day, OO Network was listing. Later analysis suggested that Shell had deliberately managed to delay the release of its financial report until January 4th, the same day OO Network was listing.
This is because on this day, all attention would be focused on OO Network, and not on an established company like Shell. Secondly, Shell believed that OO Network's stock price was flashy but unsubstantial, and it would definitely fall below $40, perhaps even to $30.
Shell also knew that OO Network had been trying to leverage its company's popularity recently, claiming that OO Network was second only to Shell in terms of profitability. If the stock price of this company plummeted, it would inadvertently prove Shell's greater investment value.
Finally, and most importantly, if OO Network plummeted from $50 to $30, it would greatly attract the attention of various media outlets, drawing all the news to OO Network. This way, Shell's own third-quarter financial report would not be as eye-catching, and its impact would be much smaller. Ultimately, the decline would also be significantly reduced.
It's like an Indian person appearing on a street in China. People would point and say that person is very dark, and all attention would be focused on the Indian person.
But if a black African person appeared at this time, who is obviously darker, then people's focus would shift to the black person, and the attention on the Indian person would not be as high, making it easier for the Indian person to slip away.
It's roughly the same idea. Shell was determined to use OO Network as a shield to dilute the impact.
However, Shell's calculations went awry because OO Network unexpectedly announced two major positive news items, which led to OO Network not falling below $40 as anticipated, but maintaining its stock price at $48. Instead, the market was full of praise for OO Network.
This made Shell's management extremely anxious, but they had no other option. After all, the 4th was the final deadline. If they did not want to be thoroughly investigated for their financial situation and have more terrifying problems uncovered, they had to release their third-quarter financial report on that day.
Therefore, thinking that if OO Network could hold its stock price at $48, it would also be a hot news item and could help divert attention, Shell reluctantly released its third-quarter financial report, and it immediately exploded.
The content of this financial report was simple: it informed everyone that Shell Petroleum did not earn much money, or even lost money, in the third quarter of 2007.
So, how much did they lose?
It wasn't much, around $20 billion, just enough to offset the profits from the first and second quarters. However, it was worth noting that in the first three quarters combined, Shell Petroleum still made a small profit of $600,000, which at least represented profitability!
As for why the third quarter incurred such a huge loss, the report did not clearly explain it. It merely used a phrase like "invested heavily in basic oilfield construction in certain countries to pave the way for future growth."
Of course, only quarterly reports can be so misleading. The specific reasons must be clearly stated in the annual report, indicating which projects lost money and how much, down to the last decimal point.
But no matter how Shell manipulated its third-quarter financial report, it could not prevent Shell Petroleum from suffering a huge loss. From being the top-earning enterprise of the year, it instantly became a company that might incur losses... after all, the fourth-quarter financial report has not yet been released, and who knows what the situation will be for Shell Petroleum in the fourth quarter. xxs 1
As a result, naturally, after Shell Petroleum released this third-quarter annual report, a large amount of capital began to flee Shell Petroleum. In an instant, Shell Petroleum's stock price plummeted by 15%, losing over $80 billion in market capitalization in one minute.