iQiyi has officially listed on NASDAQ in the United States. The IPO issuance price is set at US$18/ADS, and the financing amount is US$2.25 billion, far exceeding the $1.5 billion planned to be raised. The total market value is 11 billion US dollars.
iQiyi listed (picture from baidu)
From the establishment of the company in 2010 to the IPO in 2018, iQI is a "protracted war." In 2014, iQiyi first reported that it would go public in the US; in 2015, it was rumored that iQiyi will be listed on the domestic strategic emerging board; in February 2016, iQiyi announced its privatization, which lasted for five months. Privatization was aborted due to price and transaction structure problems.
Although the road to IPO was bumpy, it was finally fulfilled. Baidu, the controlling shareholder of Aiqiyi, also really let out a sigh of relief. After the IPO, iQiyi will embark on a self-sufficient life, but the video field still presents a "three-nation kill" situation, and it will be more intense.
Iqiyi listed Baidu finally relieved
Aiqiyi was established in 2010. At that time, there was already a head company in the domestic video field. In 2009, Cool6 was listed on NASDAQ in the US after the acquisition of Shanda. In August 2010, LeTV was listed on the China Growth Enterprise Market; 2010 In 2011 and 2011, Youku and Tudou were listed in the US.
With the help of Baidu’s big tree, Aiqiyi sneaked into the red sea of ​​the video site. Especially after the merger of Youku Tudou in 2012, iQiyi entered the top three positions of the video website for the first time. On May 7, 2013, Baidu acquired PPS video business for 370 million US dollars, and then Iqiyi and PPS merged. At this time, iQiyi has locked in the dominant position in domestic video websites.
Gong Yu and Li Yanhong (picture from baidu)
The growth of iQiyi is obvious to all. This is behind the real money. Iqiyi’s net loss in 2015, 2016 and 2017 was 2.575 billion, 3.074 billion and 3.736 billion yuan respectively. It is Baidu’s powerful “transfusion†that supports iQiyi to live. Baidu began to disclose the cost of content based on iQiyi in 2012, and its investment in content cost has almost doubled.
Baidu content cost
In 2012, the content cost was 215.1 million yuan (about 34.5 million US dollars), and the total revenue was 22.30 billion yuan, accounting for 0.9% of total revenue.
In 2013, the content cost was 830.4 million yuan (about 173.2 million US dollars), and the total revenue was 31.944 billion yuan, accounting for 2.5% of total revenue.
In 2014, the content cost was 1.872 billion yuan (about 301.7 million US dollars), and the total revenue was 49.052 billion yuan, accounting for 3.8% of total revenue.
In 2015, the content cost was 3.745 billion yuan (about 578.1 million US dollars), and the total revenue was 66.382 billion yuan (about 10.248 billion US dollars). The total revenue accounted for 5.6%.
The content cost in 2016 was 7.864 billion yuan (about 1.133 billion US dollars). The total revenue was 70.549 billion yuan, accounting for 11.1% of the total revenue.
In 2017, the content cost was 13.4 billion yuan (about 2.06 billion US dollars), and the total revenue exceeded 83 billion yuan, accounting for 15.8% of the total revenue.
Now Iqiqi IPO is listed, which is a good thing for Baidu. On the one hand, Baidu currently holds a 69.6% stake in Aiqiyi, the largest shareholder of iQiyi. After the listing of iQiyi, its market value reached 110 US dollars, and the market value of 7.656 billion US dollars was owned by Baidu. It seems that this eight-year wait is very worthwhile.
On the other hand, after the listing of iQiyi, Baidu will have more energy and funds to invest in the strategic direction of AI and driverless.
It is reported that although the iQiyi IPO fell below the issue price on the same day, Baidu's share price ushered in a small increase, closing at 223.19 US dollars, up 0.09% from the opening price.
In addition, Deutsche Bank recently released a market research report, which set Baidu's stock rating to “Buy†rating and a target price of US$319, which is about 26% higher than the current Baidu share price. And Baidu is expected to have a market value of more than 100 billion US dollars this year. The current Baidu market value is 77.7 billion US dollars.
After the launch of iQiyi, the "Three Kingdoms Kill" will continue
Iqiyi has obtained approximately $2.25 billion in financing through listing, which is "ample ammunition." However, the listing of iQiyi is only the beginning, because the killing of domestic video sites is not over, especially the three heads of Youku Tudou, Iqiyi and Tencent will be more intense.
Iqiyi Youku Tencent battle (picture from baidu)
Before the listing of iQiyi, Gong Yu said that although iQiyi is still at a loss, his confidence in future earnings comes from three driving forces: brand advertising, paying users, and information streaming advertising. The basis for realizing the above driving force is a large investment in content.
The success of the homemade drama and the self-made network has enabled iQiyi to harvest a large number of paying users and advertisers. Now Youku Tudou and Tencent have already learned.
For example, in 2017, Youku has "White Night Fighting" and "The Grand Army Division Sima Yi's Military Division", and Tencent's "Ghost Blowing Lights of the Ancient City", "Full-time Master", "The Year's Flower and the Moon" are also Good performance.
In terms of network comprehensive, Iqiyi has invested heavily in the production of "Idol Trainee" and "Hot Blood Street Dance Group", and it has responded well. However, just before the "Hot Blood Street Dance Group" went online, Youku first launched "This! It is the street dance, which can be said to be a close confrontation with iQiyi.
It is understood that in 2017, Youku, iQiyi, Tencent video announced at the China Merchants Association, the episode plans are 58, 79 and 67 respectively. It can be seen that the three companies have a hard time dividing the content.
In terms of copyright, due to the competition among video websites, the copyright of popular TV drama networks has risen to “high priceâ€. In the same year, 81 episodes of "Wulin rumor" only sold 100,000 yuan of online copyright is a past tense. Recently, some sources broke the news. In 2015, the purchase price of "Yueyue Biography" was 3 million/set. In 2017, the online purchase price of "Rugao Biography" rose to 9 million/set.
With such high investment, now Iqiyi's $2.55 billion in financing through listing has only solved the urgent need, and Iqiqi may still face financial problems in the future. And once the investment in the content is insufficient, Iqiyi may fall behind. iQiyi also clearly stated in its prospectus that if it does not continue to purchase content, it will have a substantial negative impact on iQiyi's business.
Iqiyi IPO suffered a break, why not listed on A shares
Iqiyi IPO opened at $18.20, up 1.1% from the issue price. However, after falling below the issue price, the decline was over 10% and eventually fell 13.61%.
Not only love Qiyi, but the listing of the B station the day before was also a break. B stood below the issue price on the 28th, and fell 2.26% on the first day and 2.14% on the next day (29th).
As for the Chinese video website that entered the US stock market earlier, only the 2010 Youku family has risen for three days. The potatoes that went on sale in 2011 fell below the issue price.
In fact, this is not a profit model for the US stock market that does not understand the Chinese stock market. And more is related to the big environment of the stock market. It is reported that 2010 is a year of global economic recovery. The Dow has risen to 11580 points from the beginning of the year to 10,580 points, a 28-month high, up 11.34% from the beginning of the year. Therefore, countries began to introduce loose monetary policies, which led to a large amount of cash inflows. stock market. For example, China’s “4 trillion plan†between 2008 and 2010.
In comparison, the US stock market environment in 2018 is not good. The first is that the Fed’s interest rate hike has a positive effect on the stock market; on the other hand, the potential trade war between China and the United States has also affected the stock market. For example, after US President Trump announced the "301" adjustment of Chinese products on the 24th, the three major US stock indexes closed down more than 2.4%, the biggest one-day drop in six weeks.
As for why Iqiyi and B stations are not listed on the A-share market, the main reason is that both companies are in a state of loss, and other conditions are not in line with the domestic A-share listing requirements. As for the CDR that has been hyped for a long time, it is currently in the stage of argumentation, and the implementation time is uncertain. (Zhang Jinliang)
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