NEW YORK–(BUSINESS WIRE)–Labaton Sucharow LLP, a nationally ranked and award winning investor rights law firm, announces it is developing a proprietary investigation concerning potential securities claims on behalf of shareholders of IQIYI INC (Ticker: IQ) resulting from allegations that IQ may have issued materially misleading business information to the investing public.
IQ, which is majority owned by Chinese search giant Baidu, is a video streaming platform considered to be the “Netflix of China.”
Wolfpack Research, which describes itself as an “activist research and due-diligence firm”, released a report on Tuesday, alleging that iQiyi “was committing fraud well before its IPO (initial public offering) in 2018 and has continued to do so ever since.”
Wolfpack surveyed 1563 iQiyi users within IQ’s target demographic in China during October and November 2019 and found that approximately 31.9% of IQ users have access to its VIP-only content through their memberships with IQ’s partners. Wolfpack estimates IQ inflated its 2019 revenue by approximately RMB 8-13 billion, or 27%-44%.
The company pushed back against the report and said it believes it contains “numerous errors, unsubstantiated statements and misleading conclusions and interpretations.”
In 2018, iQiyi was spun off from Chinese search giant Baidu in a U.S. IPO that raised over $2.2 billion. Baidu holds a more than 56% stake in iQiyi. Often dubbed the “Netflix of China”, iQiyi has become one of the major content streaming platforms in the country.
IQ stock dropped nearly 5% yesterday on extraordinary volume and is trading down in today’s pre-market.
If you are a shareholder or option holder that suffered losses in IQ, and wish to participate, learn more, or discuss the issues surrounding the investigation, please contact David J. Schwartz using the toll free number (800) 321-0476 or via email at [email protected].
About the Firm
Labaton Sucharow LLP is one of the world’s leading complex litigation firms representing clients in securities, antitrust, corporate governance and shareholder rights, and consumer cybersecurity and data privacy litigation. Labaton Sucharow has been recognized for its excellence by the courts and peers, and it is consistently ranked in leading industry publications. Offices are located in New York, NY, Wilmington, DE, and Washington, D.C. More information about Labaton Sucharow is available at http://www.labaton.com.