iQIYI Inc is too expensive for Alibaba
iQIYI holds second place in the Chinese video streaming market. Though, it has not been able to turn a profit in recent years.
avatar
Staff or Guest writer for The Dog of Wall Street.
2020-11-27 17:49

Alibaba Group Holding Ltd ($123.9|1.15%) was reportedly in discussions with Baidu (NASDAQ: BIDU) to buy a controlling stake in iQIYI Inc (NASDAQ: IQ), a video streaming service. However, the negotiations did not reach any results after Baidu valued iQIYI at nearly $20 billion. 

Tencent Holdings Ltd also reportedly held discussions with Baidu to acquire a majority stake in iQIYI. But those discussions also failed to produce any results due to the high valuation set by Baidu. 

iQIYI is considered as a Netflix of China. It is listed on Nasdaq with a market value of $16.148 billion as per its stock’s previous closing price. Baidu holds a 56.2 percent stake in the firms that translates to a value of about $9.2 billion. 

However, Tencent reportedly thinks the video streaming service is about half of what Baidu is demanding. 

iQIYI holds second place in the Chinese video streaming market. Though, it has not been able to turn a profit in recent years. It reported weak revenue and dropping subscribers in its latest quarterly financial report last week. Its shares went down following the third-quarter results. 
 
Moreover, the U.S. Securities and Exchange Commission (SEC) is investigating iQIYI after Wolfpack Research accused the online video platform of inflating numbers. However, the firm has refused the report released by Wolfpack, saying it internally reviewed the allegations but found no proof as claimed by the report. 

iQIYI shares have been on a roller-coaster ride since the start of 2020. The stock started the year at a price of around $19 and saw many ups and downs in the subsequent months. It touched a low price of around $15 in May and a high price of nearly $28 earlier this month. Overall, its share price has increased around 4 percent so far this year.


Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.

Published On
2020-11-27 17:49

avatar
About the Author
Staff or Guest writer for The Dog of Wall Street.

$123.9
$1.41 1.15%
Perf. YTD -46.22%
52W high -54.83%
52W low 2.5%
PE Ratio 17.18
MKT Cap 335.88B
Other:  BIDU, IQ

Analyst Ratings
Target Price $2296.2
# of Analysts 50
Last updated 2020-11-29


Is it safe to buy AliBaba stock yet?
Over the past few months I have checked in a few times on Chinese tech giant AliBaba (NYSE:BABA).
By Mike Sakuraba | 1 week ago

2 China Stocks to Buy While Others are Fearful
Many of these stocks are at their cheapest levels in years, and yet investors simply do not want to deal with the uncertainty.
By Mike Sakuraba | 2 months ago

Better Investment: AliBaba or Tencent
I am wading right into controversy in this week’s Better Investment comparison.
By Mike Sakuraba | 3 months ago

Revisiting China: the recent government crackdowns
Back in April, I wondered if China stocks were untouchable given the current climate where AliBaba (NYSE:BABA) founder Jack Ma went missing from the public eye.
By Mike Sakuraba | 4 months ago

Are China Stocks Untouchable Right Now?
Much has been made about the recent performance of Chinese companies as some unknown headwinds are blowing in their direction
By Mike Sakuraba | 7 months ago

Ali Baba Sets its Sights on the Electric Vehicle Industry
The ground-breaking announcement from Baba came in the form of a partnership with China’s largest automaker SAIC Motor, to launch a new electric vehicle sedan in the world’s largest automotive market.
By Mike Sakuraba | 10 months ago