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iQiyi's double rumored listing will not be an Oolong anymore
In other words, there was news in the early morning of September 26th that iQiyi might be going public next year. As a fan, I reached out to some people I know who work at iQiyi, asking if this was true. Their response was calm but telling: "Double eyes, I'm already numb and hopeless." It seems like iQiyi has had multiple failed attempts at listing before, and now it's left many employees feeling uncertain.
I also did some digging and found out that iQiyi is indeed considering an IPO, though it hasn't officially started yet. They've just begun initial talks with major securities firms, and the valuation is estimated to be around $10 billion. The potential markets include both the U.S. and Hong Kong.
To put it simply, the plan is in place, but nothing is set in stone yet. We'll have to wait and see what happens.
Still, Xiao Bian believes that after so many years of hard work by the management team and staff, it's time for iQiyi to rise again. It wouldn’t make sense to rush into something just because the opportunity exists. It’s important to take the right steps and ensure long-term success.
Despite still facing significant losses, iQiyi's financial situation is gradually improving. There's hope that the company can catch up with the current wave of stock market listings and eventually break even soon.
In Xiao Bian’s view, iQiyi is showing positive signs in several areas:
1. Last year, iQiyi’s revenue reached RMB 11.3 billion, a 113% increase year-over-year. While the loss was still close to RMB 2.8 billion, the rate of loss has significantly decreased.
2. This year, according to Baidu’s information, iQiyi’s finances are being optimized. In the second-quarter earnings report, Baidu revealed that iQiyi has over 30 million paid users, generating more revenue than its competitors. Baidu’s CFO even cited the growth in paid subscribers as the main reason for the company's financial improvement.
3. Although iQiyi’s paid members have spent between 20 to 30 million in a year, the growth rate slowed down compared to the rapid expansion in the first half of last year (from 10 to 20 million members in just six months). However, this doesn’t mean the user base is shrinking. With so many Chinese internet users, there’s still huge potential for paid users. Additionally, Gong Yu disclosed in June that iQiyi’s membership payments and advertising revenue are now at a 1:1 ratio, showing a well-balanced income structure. Analysts on Wall Street expect iQiyi to break even in 2019.
4. iQiyi has also shown strong growth in attracting paying users. For example, the recent success of “China Hip Hop†demonstrated its ability to create popular content that drives engagement.
5. From a market perspective, after Youku was integrated into Alibaba, iQiyi and Tencent Video now dominate the market in a duopoly. This gives them stronger bargaining power when it comes to advertising deals.
Of course, some people argue that iQiyi recently raised $1.5 billion in funding and has a large amount of prepaid user fees, which means its cash flow is strong enough to sustain operations for at least two more years. So, there's no urgent need to go public just yet.
But Xiao Bian still thinks it’s better to act sooner rather than later. After all, Baidu and other investors have been investing heavily for seven years. The founding team and staff have worked tirelessly for years, and it’s only fair they benefit from the company’s success.
So, in this vast and densely populated digital space in Greater China, there's potential for iQiyi to become a global player, similar to Netflix, quickly reaching 100 million paying users and turning profits. Let’s hope iQiyi can go public soon, see its valuation rise, and allow its employees—who’ve worked for seven years—to finally enjoy the fruits of their labor.