LeTV's 5 billion financing crisis looms, LeTV Sports slims down to save itself

After experiencing a funding crisis, the share price of LeTV (300104.SZ), a popular GEM company, has become increasingly nervous. However, as the share price continued to fall, the company's financing scale increased instead of decreasing, and some financing customers still acted as "suicide squads" and gambled in reverse.

On December 6, rumors of layoffs at LeEco spread again. That afternoon, LeEco's stock price plunged sharply, approaching the limit. Since the resumption of trading after the private placement, the company's market value has evaporated by more than 40 billion yuan, and the institutions participating in the private placement have accumulated a floating loss of nearly 1 billion yuan. The decline in stock prices unexpectedly failed to scare away the financing customers who were "licking blood on the knife edge". In the past two weeks, LeEco's margin trading balance has increased by more than 100 million yuan against the market trend, and the latest balance has reached 5.064 billion yuan, accounting for more than 11% of the overall circulating market value.

"There was a wave of speculation by margin traders after the resumption of trading in June, but many of those who had rushed in before were trapped, including those who had made a lot of money from LeEco before." People familiar with the margin trading business believe that the 40% drop since the resumption of trading has caused heavy losses to some margin traders. Judging from the current downward trend of LeEco's stock price, if it is not braked, some accounts with high proportion of holdings may trigger alerts.

Stock price plunges to a new low, and the private placement agency loses 1 billion yuan

On December 6, the layoff crisis at LeTV Sports once again caused LeTV's stock price to fall.

According to media reports, LeTV Sports will soon lay off 20% of its employees, of which 50% will be laid off in the smart hardware department. LeTV Sports Editor-in-Chief Ao Ming has submitted his resignation and will soon leave the company. The business segments have also been adjusted, with media, offline and equipment being the main lines, with media business being the core.

That afternoon, LeTV's stock price suddenly plunged, once dropping to 39 yuan, close to the limit. In the end, LeTV closed at 35.80 yuan that day, a sharp drop of 7.8%. The stock price hit a new low this year. The daily amplitude was as high as 10.84%, and the transaction volume was 2.32 billion yuan.

Although LeTV Sports later clarified that the layoffs were an "optimization" of about 10%, and that the proportion of layoffs varied from department to department, and that the specific optimization ratio depended on the actual operating conditions of each business, the market still made a causal connection between layoffs and the decline.

"LeTV's stock price is very fragile now. It will fall at the slightest negative rumor. This shows that investors have no trust in LeTV and Jia Yueting's series of rescue measures. After all, the losses are visible." A private equity person who pays attention to LeTV told the First Financial reporter.

In fact, after resuming trading in June this year, LeTV's stock price once reached 60.98 yuan, but soon began to fall. Although it rebounded during this period, it has never been able to reverse the downward trend. It ushered in a round of sharp decline since November 2, and although it has rebounded slightly since then, the cumulative decline in the past five months is still close to 40%.

The latest share price of 35.80 yuan has fallen by 20% compared to the previous 45 yuan fixed increase, causing the participating institutions to lose nearly 1 billion yuan.

In July this year, LeTV announced that it had completed a nearly 4.8 billion yuan private placement at a price of 45.01 yuan per share. Caitong Fund, Harvest Fund, and Zhongyou Venture Capital Fund, three public funds, and retail investor Zhang Jianping took over the private placement. Among them, Caitong Fund, Harvest Fund, and Zhongyou Fund subscribed 1.76 billion yuan, 960 million yuan, and 960 million yuan respectively. Retail investor Zhang Jianping spent 1.12 billion yuan to subscribe for 24.8834 million shares, and with a shareholding ratio of 1.26%, he ranked as the seventh largest shareholder of LeTV.

Through statistics, it is not difficult to find that as of now, Caitong Fund has suffered a floating loss of more than 340 million yuan, Harvest Fund and Zhongyou Fund have suffered floating losses of nearly 200 million yuan respectively, and Zhang Jianping alone has lost about 224 million yuan.

Margin traders are betting against the market and the risk of liquidation is approaching

Compared with the institutions that participated in the long-term private placement of LeTV, the short-term investors who bet on LeTV against the market are also facing the dilemma of being deeply trapped. In the view of the two-way financing people, the risk of liquidation is approaching these "LeTV fans" who are "living on the edge of a knife".

The balance of margin trading shows that as of December 5, LeTV's margin trading balance was 5.064 billion yuan, of which the financing balance was 5.060 billion yuan. Two weeks ago, this figure was 4.962 billion yuan.

"Some people made a lot of money by betting on this company through margin trading. After the recent decline, although the main funds are selling, those who are financing short-term are obviously betting that the stock price will rebound, and they are trapped." While the stock price keeps falling, the margin trading volume is rising instead of falling. Regarding this unexpected situation, a person in charge of margin trading business said.

It is worth mentioning that investors started to bet big on LeTV since June. Before June this year, LeTV's financing was stable at around 3 billion yuan. But after LeTV resumed trading in June, this amount quickly surged to 5 billion yuan. On the first day of resumption, it set a record of nearly 2 billion yuan in financing purchases in a single day, accounting for more than 16% of LeTV's transaction volume on that day.

It is worth mentioning that as a GEM stock, LeTV's latest circulating market value is 45.2 billion yuan. This means that the proportion of financing shares to its circulating shares has exceeded 11 percentage points, which is not common in margin trading targets.

"The risk is relatively concentrated at this ratio. If there are bold (margin customers) holding a high proportion of a single position, they will really face the pressure of closing their positions if the stock price drops by 50%. "The above-mentioned margin trading person said that since the overall leverage ratio of most securities firms will not exceed 1:1 and they will limit the proportion of margin trading positions held by a single account, they have not heard of any margin trading explosion at LeTV.com so far.

However, the person also warned that if LeTV's financing was to burst, the serious consequence could be a panic withdrawal. The aforementioned private equity person also believed that the risk of LeTV's 5 billion yuan financing should not be underestimated. If it caused a stampede in the financing market, it might trigger a "domino effect", causing LeTV's stock to fall further, and Jia Yueting and the entire LeTV would face a greater stock pledge crisis.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.