With one fewer competitor, it was undeniably great news for Dida Takeout. As other takeout platforms' listing efforts in the US were steadily progressing, they were on the verge of successfully raising funds and going public.
Of course, problems still arose. For instance, although orders and riders were continuously recovering, the expenses of each branch company were increasing. Nearly every branch company was losing money, all operating at a deficit.
However, because they had lost even more money during the subsidy war, hemorrhaging hundreds of millions daily, Chen Hu didn't pay much attention to these losses.
He completely overlooked the fact that, at this point, the company was no longer engaging in subsidy wars, and therefore, each branch company should ideally be starting to turn a profit.
Initially, everything should have continued smoothly. But then an unexpected black swan event occurred: the outbreak of the Lj incident directly led to a severe slump in the US stock market, with Microsoft's stock plummeting.
Naturally, these events had little to do with Dida Takeout. However, the NASDAQ US stock market, due to its reliance on Windows systems, became extremely concerned about their data being held hostage by hackers. After all, a successful hack could potentially lead to the collapse of global stock markets.
Consequently, NASDAQ announced an immediate three-day suspension of trading to upgrade and maintain its computer systems. The originally planned listing was, therefore, naturally postponed.
Three days wasn't a long time, and investors could understand the need for system maintenance and data security. No one wanted to see stock market data completely collapse.
But the problem was, three days proved insufficient to resolve the data security issues. Thus, they extended it by another two days, and then by yet another week. In the end, NASDAQ suspended trading for a total of 18 consecutive days, setting a remarkable historical record for a trading halt caused by a virus.
While this 18-day trading suspension didn't directly impact Dida Takeout, the issue was that during this period, one company's database was hacked.
The hackers demanded a ransom of 3,000 Bt from this company. Based on the market price at the time, this amounted to approximately 3 million US dollars.
The company naturally refused, as they had wisely kept backups and were not afraid of their data being locked. Enraged by the refusal, the hacker proceeded to publish the data online, causing a massive uproar.
The company whose data was frozen was called Muddy Waters. Founded six years prior, it was a financial institution specializing in short selling, with a particular fondness for targeting Chinese concept stocks.
Over six years, 16 Chinese companies had experienced sharp stock price declines due to their short-selling reports.
Among the most famous was a company that had been hailed as the "American leek harvester," the "NASDAQ mudslide," the "nightmare for US stock investors," the "inheritor of the internationalist spirit of Western capital nurturing Eastern consumers," "an emotionless coupon machine," the "Karexi of the hot pot cleaning industry," and the "uncrowned king of the 2019 World Money-Burning Competition." This company was Ruixing.
A single short-selling report from Muddy Waters not only caused Ruixing's stock to plummet but also led to a complete overhaul of its management, nearly resulting in its delisting from the US stock market.
Remarkably, however, the company not only survived but began to rebound in 2021. It has now surpassed Starbucks to become the most popular coffee chain in China, with its market share even greater than before it was targeted for short selling.
Returning to the matter at hand, Muddy Waters had apparently set its sights on the soon-to-be-listed Dida Takeout. Among the dozen or so draft short-selling reports that had been leaked by the hacker but not yet released to the public, the first one was concerning Dida Takeout.
According to this short-selling report, while Dida Takeout's prospectus indicated that the company had regained market share in the latter half of 2015 and the first two months of 2016.
The two most crucial metrics, daily order volume and rider count, were continuously increasing.
Daily order volume had returned to 80% of its peak, and the rider count had even surpassed its peak. On average, each first-tier city had over 1,200 riders, with Shanghai, having the largest rider population, exceeding 13,000.
Muddy Waters' report expressed doubt about these figures. However, they were unable to obtain Dida Takeout's detailed internal data. Thus, they resorted to their tried-and-true, albeit rudimentary, method: hiring 100 teams of employees.
Each team consisted of two people. One person was responsible for holding a terminal and continuously filming a restaurant on Dida Takeout that received over 2,000 orders per month. The other person was responsible for recording the color of the riders they saw using a pen and their own eyes.
This was because Dida Takeout riders and Ebu Pa takeout riders were easily distinguishable. Dida Takeout riders wore yellow uniforms, while Ebu Pa riders wore blue uniforms.
The entire sampling process lasted for one month. These samplers started work with the restaurants in the morning and finished with them in the evening, faithfully recording all riders entering and exiting the restaurants each day, along with detailed video evidence.
After a month, the resulting data was astonishing.
Take, for instance, one of the most popular restaurants, "Old Street Old Wang Shengjian." This establishment boasted an incredible monthly sales volume of 32,000 orders on Dida Takeout, averaging around 1,000 orders per day.
Even if each rider could handle an average of three orders per trip, this would mean over 300 yellow-uniformed riders entering and exiting the restaurant daily.
However, according to the final statistics, only 12 yellow-uniformed riders entered the restaurant throughout the day. Furthermore, the video clearly showed that these riders were mostly picking up only one order at a time.
This restaurant, with over 32,000 monthly orders, had only one employee, whose main job seemed to be idly swatting flies.
This was not an isolated incident; other restaurants with booming sales figures on Dida Takeout exhibited a similar pattern. The number of yellow-uniformed riders entering and exiting was remarkably low, accounting for only about 1% of the claimed total.
Even more curious was that these restaurants only saw yellow-uniformed riders, with no blue-uniformed riders appearing.
However, this observation was quickly explained. These restaurants displayed a "Exclusive Partnership" logo, indicating they only partnered with Dida Takeout and not Ebu Pa. Therefore, it was understandable that Ebu Pa riders would not be seen there.
Out of the 100 restaurants they monitored, 42 fell into this category. The remaining 58 were restaurants with monthly sales of around 2,000 orders.
These restaurants had a higher number of yellow-uniformed riders entering and exiting daily. However, compared to the number of blue-uniformed riders, their numbers were minuscule.
On average, for every 15 blue-uniformed riders entering and exiting, only one yellow-uniformed rider was observed.
Comparing this with the Ebu Pa app revealed that these restaurants, with monthly sales of around 2,000 orders on Dida Takeout, were essentially top-tier establishments with over 10,000 orders on Ebu Pa. It was no wonder so many blue-uniformed riders were seen, as their food was genuinely popular.
In addition, Muddy Waters dispatched 10 teams to guard 10 busy intersections in Shanghai, conducting approximate counts of both blue-uniformed and yellow-uniformed riders passing through these areas. The conclusion was that the number of yellow-uniformed riders was less than 1/20th the number of blue-uniformed riders, an even more drastic ratio than the initial 1/15.
After performing scientific mathematical modeling and comparisons, Muddy Waters concluded that Dida Takeout's rider count was approximately only 3.82% of Ebu Pa's.
Assuming Ebu Pa's disclosed figures were accurate, and they had 13,000 riders in Shanghai alone, then Dida Takeout's rider count in Shanghai would be less than 500.
Simultaneously, Dida Takeout's publicized figure of over 400,000 daily orders in the Shanghai market was also declared false, with the actual order data likely not exceeding 4,000 orders, less than 1% of the claimed amount.
Clearly, the release of such a meticulously detailed report, with all data supported by corresponding video evidence, had a terrifying and profound impact on the market.
Muddy Waters had clearly intended to wait until Dida Takeout went public and its stock price reached a certain peak before releasing this report to short the stock and generate substantial profits.
However, the unforeseen consequence was that the enraged hacker, whose ransom demand had been refused, leaked the investigative report prematurely. This led countless potential investors in Dida Takeout to exclaim their good fortune, realizing how fortunate they were not to have invested heavily in its stock after it went public.
Following the report's publication, the US Securities and Exchange Commission promptly announced a halt to Dida Takeout's listing process. They also requested Dida Takeout to submit a detailed explanation report addressing the significant discrepancies between the data presented in the short-selling report and the figures disclosed in their prospectus.
Chen Hu was awakened from his sleep in the middle of the night by a barrage of angry phone calls from over a dozen investors. It was in a semi-conscious state that he then read the investigative report from Muddy Waters.
Initially, Chen Hu was furious, believing that someone had maliciously bribed Muddy Waters to slander him. Chen Hu was certain that he had never engaged in data manipulation, and the data he had provided in the prospectus was true and reliable, with all records verifiable in the company's backend. This was clearly a smear campaign by his competitors.
If not for a call from Zhao Yao, Chen Hu would have immediately dialed Zhao Yao and unleashed a torrent of abuse.
However, after calming down, Chen Hu also began to consider some of the abnormalities in his company's data.
Most importantly, the videos in the short-selling report could not be fake. Why were the restaurants that showed astonishing sales in their backend actually so deserted in reality?
The next day, Chen Hu turned off all his phones and personally went to the vicinity of one of the best-selling restaurants to observe.
The results proved Muddy Waters correct. That morning, fewer than two riders entered the restaurant, which was supposed to have over 8,000 monthly orders.
When a third rider finally appeared, Chen Hu could no longer contain his anger and ordered his subordinates to bring the rider over.
"What are you doing? You can't hit me. If you hurt me, I won't be able to earn money to pay off my debts!" the rider pleaded as he was brought over by two bodyguards.
"I am an administrative specialist for Dida Takeout!" Chen Hu sighed. "I have some questions for you."
"Don't ask. I don't know anything, and I'm not an employee of your Dida Takeout!" the rider quickly replied.
"You're not our employee? Then why are you wearing our uniform?" Chen Hu asked in surprise.
"I'm really not. I was forced by your station manager to buy thirty sets of employee uniforms. If I don't wear them, they'll just go to waste at home!" the rider said with great resignation.