Reuters reported on Tuesday that Baidu is negotiating with potential acquirers to sell its 53% stake in iQIYI, attracting interest from buyers including Hong Kong private equity firm PAG and China Mobile. iQIYI‘s stock price dropped by 3% in the U.S. pre-market. iQIYI responded that this news is untrue.
Since 2020, iQIYI has been rumored to on Baidu‘s selling block, with the rumored takeover parties including Alibaba, Tencent and ByteDance. Baidu officially responded to the rumors about the sale in November 2020 as being false. The company clarified that iQIYI is an important part of Baidu‘s content ecology, and that Baidu will, as always, support the development of iQIYI‘s platform and business.
Baidu owns 53% of the shares of iQIYI and holds more than 90% of its shareholders’ voting rights. Founded in 2010 as one of China’s leading long-form video platforms, iQIYI has been in a deficit for more than 10 years. The company finally achieved a net profit of over 100 million yuan ($14.9 million) in Q1 of this year, which is the first quarterly profit since the company went public.
As of March 31, 2022, the unaudited financial report for the company’s Q1 showed that iQIYI had garnered revenue of about 7.3 billion yuan and realized a net profit attributable to the company of 169 million yuan. The largest source of revenue was its membership services, which brought in a revenue of 4.5 billion yuan, a year-on-year increase of 4%. The average daily paid subscribers totaled 101 million, a net increase of 4.4 million compared with the previous quarter. The increase in membership services revenue was partly due to the increase in fees last year. The average revenue per member in this quarter was 14.69 yuan, compared with 13.64 yuan in the same period last year.
Gong Yu, Founder and CEO of iQIYI, talked about the company’s business growth during a recent financial report meeting: “In the first quarter of 2022, we launched a series of high-quality content that promoted the growth of membership business. Besides, by adopting a variety of effective measures to improve operational efficiency, iQIYI has achieved profit growth and improved profit margins.”