Iqiyi has been repeatedly sent to the US IPO. What is it about anxiety?

Following the screening of "China's Hip-Hop", iQiyi came back again, but this time not because of the show, but because of its latest capital dynamics. On the 26th, Bloomberg reported that Baidu’s video site, iQiyi, will be listed in the United States as early as next year, and its valuation may exceed US$8 billion. In response to this iQIYI's response, "I don't comment."

However, according to informed sources, Baidu is about to start negotiations with the investment bank, with a target value of up to 10 billion US dollars. Baidu hopes to continue holding iqiyi through the binary stock structure after the IPO. However, the current IPO plan is still at an early stage and the final valuation may change.

In fact, the news of iQIYI IPO has been like a “menstruation post” since 2015, and it will be circulated once every once in a while. Although the valuation and location are different, the final result is nothing.

The rumors of the market for iQIYI are not without merit. For a long time, the growing shortage of funds and competition anxiety of iQIYI seems to be mitigated only by IPO landing on the capital market.

Iqiyi's adult ceremony only one IPO?

First of all, you may wish to take a simple look at the market rumors of iQIYI.

Iqiyi was originally known as Fantastic Art and was formally launched on April 22, 2010. Baidu became the single largest shareholder of iQiyi in 2012, and in 2013 it contributed to the merger of PPS and iQIYI. After privatizing Youku potatoes on Alibaba, Baidu also tried to privatize Iqiyi.

During the Spring Festival 2016, iQiyi received privatization invitations from Baidu President Li Yanhong and iQiyi President Gong Yu. The two parties jointly acquired 80.5% of the shares of iQiyi.

For this management buyout plan, the outside world generally interpreted Iqiyi as a way to return to the domestic strategic emerging version, but this incident has encountered unprecedented failures.

The first is the cessation of the Strategic Emerging Plan, and the disappearance of specific plans from the agenda. It also means that iQiyi has announced abortion by means of a strategic emerging plan to land on the domestic capital market.

Secondly, in July 2016, the management buyout plan had been declared bankrupt because the parties could not agree on the structure and price. The direct cause of the failure of the above acquisition plan is that Baidu’s largest shareholder, American hedge fund Acacia Partners, believes that the 2.8 billion US dollar privatization of Iqiyi’s jeopardization is too low, violating the long-term interests of Baidu and its shareholders and demanding that Li Yanhong cancel the acquisition. IQIYI.

A few months later, it was rumored that Baidu planned to spin off Iqiyi in Hong Kong or the United States in 2017 and raise about US$1 billion. At that time, Iqiyi was valued at up to US$5 billion. However, it was quickly denied by Baidu.

At the end of last year, Baidu officials responded that reports of IPOs of their iQIYI video websites were untrue and there is no timetable for listing.

At the beginning of 2017, the news of iQiyi's listing was again reported. The "Wall Street Journal" once reported that iQiyi will go to the US IPO this year, with a valuation of 5 billion U.S. dollars, and is expected to raise about 1 billion U.S. dollars.

This news seems to be a little tricky, because in February of this year, iQiyi did use the form of convertible bonds to raise 1.53 billion U.S. dollars, or about 10 billion yuan, which preliminarily confirmed the reports of the Wall Street Journal.

Now in September, IPO news renewed. I do not know how likely it is this time. However, some people in the industry have stated that iQiyi is seriously considering the issue of listing, and even some insiders say that iQiyi is only one IPO away from adult ceremony. Under the pressure of Tencent and Youku, listing may be an effective means to ease the anxiety of iQiyi.

Why is it that only iQIYI has been repeatedly rumors about IPO in so many video websites?

It seems that the truth is very simple. In the video-burning industry, iQiyi has been seriously losing money. It is necessary to improve its hematopoietic system through listing to achieve healthy long-term development.

For the loss, IGI has never disclosed financial data externally. For its financial status, it can only be read through Baidu’s financial report. According to the information, the loss of iQiyi reached 2.765 billion yuan in 2016, and the loss from the 2013-2016 period reached an astonishing 7 billion yuan.

In 2017, Gong Yu even rashly stated that he would invest 10 billion yuan. As copyright costs continue to rise, the loss data will only increase from 2016, and will not decrease.

The loss is not terrible. What is terrible is that there is no unimpeded source of funds. Although Baidu cherishes the value of iQiyi, but there are few blood transfusions, and even a once-leaning flow of traffic is also worthless because of Baidu's decline on the mobile terminal. The reality has forced iQiyi to develop independently and assume responsibility for its own profits and losses. .

Although Iqiyi has fallen into helplessness, it also has to cope with strong pressure from opponents. At least on the matter of saving money, Tencent video and Youku are never soft, behind Tencent and Ali two super Internet companies holding huge amounts of cash, willing to invest at any time.

As a simple example, TV dramas such as “Ru Bi Chuan” and “Win ​​the World”, which are attracting much attention, were purchased at astronomical prices of more than RMB 800 million by Tencent; one was bought by Ali at a price of more than RMB 480 million; the same is true in the field of variety copyright, Tencent videos and Youku generously bought many titles for the head variety rights.

Youku and Tencent videos, which are not bad money, are spending money to seize the market. On the other hand, because of the reasons for funding, Iqiyi has always been scared and developed. Even though it is still the No. 1 market, the market is changing rapidly. I am afraid that falling behind will be an instant matter.

The top 10 applications of China Mobile APP's independent devices released by iResearch in August of this year show that iQiyi ranked first in the video website industry with 610 million independent device installations, and Tencent Video followed 570 million units. Afterwards, in the quarter-over-quarter increase, iQiyi’s increase was 0.6%, Tencent’s video was 4.1%, and the gap was getting smaller and smaller.

Iqiyi knows exactly what kind of competitive environment it is facing, and it is only by accessing the capital market to obtain a hematopoietic mechanism that can ease the status of its own funds and allow it to participate in industry competition.