iQiyi priced its U.S. IPO at $18 per share: source

iQiyi, China’s equivalent to Netflix, will be listed on the Nasdaq on Thursday under the symbol IQ. Unlike its U.S. peer, the video streaming platform has a low subscriber base and generates additional revenues from syndication, online marketing and gaming.

As per a source familiar with the matter at hand, China’s iQiyi Inc priced the shares of its U.S. initial public offering at $18 per share.

IQiyi, China’s equivalent to Netflix, had issued price guidance of $17-$19 per share; at $18 per share, its total proceeds amounts $2.25 billion.

With a subscriber base of 50 million, IQiyi’s programming includes “The Rap of China”, a music reality show as well as “Burning Ice”, a crime drama; its shares will be listed on the Nasdaq on Thursday under the symbol “IQ”.

According to a statement from the firm, whose majority stake holder is Baidu Inc, it plans on using the proceeds of the U.S. IPO to expand and enhance its content offerings.

After the completion of the IPO, Baidu will continue to remain the company’s controlling shareholder.

Since its inception in 2010, IQiyi has posted losses; it reported a net loss of $594.16 million (3.74 billion yuan) for 2017, compared to a 3.07 billion yuan loss in 2016.

Unlike its U.S. peer, Netflix the bulk of whose earnings comes from subscribers, IQiyi’s membership service fees provided for only 37.6% of its 2017 revenues. Although that is up by 18.7% from its 2015 earnings, iQiyi stated it expects its earning to hover around 2017 levels “for the foreseeable future.”

The balance portion of its revenues from gaming, online marketing and syndication.

Goldman Sachs (Asia) LLC, Credit Suisse and BofA Merrill Lynch were the lead underwriters for IQiyi’s IPO.

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Categories: Creativity, Economy & Finance, Entrepreneurship, HR & Organization, Strategy

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