iQiyi Inc. prepares for U.S. IPO launch

Chinese media streaming provider, iQiyi Inc. is preparing to launch its initial public offering in the U.S. in the next coming week. The company is aiming to raise as much as $2.4 billion for its launch. The company will list under the Nasdaq exchange under the ticket “IQ.”

iQiyi is offering 125 million American depositary shares at $17 to $19 per share, according to its filing with the Securities and Exchange Commission. Underwriters have an option to sell an additional 18.75 million shares, which if exercised, can raise the valuation to nearly $2.7 billion.

iQiyi said it expects to use half of its proceeds to make investments into the company to expand its content, while reserving 10 percent to making developments to its technology.

China’s search engine giant, Baidu (NASDAQ: BIDU) owns 80.5 percent of iQiyi and plans to be largest shareholder into and after its IPO launch.

Last year, Netflix agreed to provide some of its content, such as “Stranger Things” to iQiyi, giving access to U.S. content for the Chinese market. Then, in a recent interview in January, Baidu’s President, Ya-Qin Zhang hinted at more deals to come with Netflix, reported by CNBC.

Whether iQiyi will directly compete against major U.S. streaming services such as Netflix is unclear, but the company is already facing rivals in the Chinese market such as Alibaba’s Youku Tudou Inc. and Bilibili, who is also launching its IPO soon.

iQiyi had over 60 million subscribing users, with more than 98 percent of users paying. Netflix has approximately 53 million subscribers in the U.S., along with 58 million more overseas.

For the quarter ending in December, iQiyi reported average mobile monthly active users of 421.3 million and 126 million average mobile daily active users. Users spent an average of 1.7 hours on its mobile application daily.

In 2017, iQiyi saw its annual revenue jump to $2.7 billion, increasing 55 percent year over year, but with a net loss of $574 million.

Leave a Comment