The crisis is not limited to giants

The crisis is not limited to giants

In 2022, the number one keyword in the Internet industry is no longer competition.

In the Internet bull market that has lasted for more than ten years, several giants quickly attacked the city and conquered the territory under the flourish of capital, and even burned the flames of war on the green vegetables that cost a few yuan a handful. However, in the past year, Internet companies that were once high-spirited and high-spirited have stepped into the coldest winter. Cost reduction and efficiency increase have become the key words, and the stock prices that have been falling endlessly have bottomed out.

The giants who lived in the spotlight in the prosperous years still attracted attention when they encountered setbacks: how many small targets have the market value shrunk? Are layoffs n 1 or n 3? Are there hairy crabs in the canteen during the festival? Amid the wailing, the difficulties that mid-waist companies are encountering may be hidden in the cold winter of capital.

Since 2017, China’s small Internet companies have been listed in the United States or Hong Kong one after another under the name of various “first shares”. I always like to express one meaning in interviews: this is only the first step of the Long March, and time will give the answer.

The answer given by time is unexpected: there are more than 300 Chinese concept stocks in a broad sense. In the past three years, their market value has dropped by about several trillion yuan.

Most of these companies were born in the cracks of the giants and grew up in a certain sub-industry. They were once favored as unicorn companies with great glory, listed under the name of “attribute first stock”, and then quickly fell.

There are several reasons for their fall:

  • Falsification of scale effect:Everyone’s expectation for the leader of the subdivided track is that when the market share reaches a certain level, it will have pricing power. But the problem is that not all industries plus the Internet will have the same scale effect. What’s worse is that the wars in some industries seem to never see the end of the day.
  • Subdivision demand falsification:Low penetration rate ≠ growth potential. When the growth is no longer there, the sexiness in the capital market will disappear.
  • Bonus falsification: In a state of strong regulation, some industries do not actually have great opportunities for great change.

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