Shares of China-based iQiyi (IQ) began trading Thursday, as shares opened modestly above their strike price of 18 before promptly falling.
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A spinoff from China search-engine leader Baidu (BIDU), iQiyi shares went to 18.20 before dropping. Shares for the largely unprofitable company plunged and closed down 13.6% to 15.55 on the stock market today.
IQiyi raised $2.25 billion late Wednesday with an initial public offering that priced roughly 125 million shares at 18, the midrange of its estimated range of 17 to 19. The Beijing-based company is considered the Netflix (NFLX) of China.
Largest Since Alibaba
It's the largest initial public offering of a China company on U.S. markets since the debut of Alibaba (BABA) in 2014.
The video streaming company says it has 50.8 million paying subscribers at the end of 2017, up from 30.2 million the prior year. Its market share is near 28% in China. IQiyi's on-demand video content is similar to Netflix, with TV shows and movies. Like Netflix, it uses artificial intelligence tools to make programming recommendations to subscribers.
IQiyi also accounts for about 20% of Baidu's revenue. Baidu currently holds a 69.6% stake in the company and will remain as a majority shareholder post-IPO.
In 2017, iQiyi reported revenue of $2.67 billion, up 55% from the previous year, and a net loss of $574 million, according to the IPO prospectus. The company was founded in 2010.
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The post IQiyi, The Netflix Of China, Begins Trading — And Then Falls appeared first on Investor's Business Daily.
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