The Wall Street Journal reported Thursday that the group was looking at a flotation in either the U.S. or Hong Kong some time next year. It said that the share sale would follow the issue of convertible bonds or other financial instruments and that the sale could raise $1 billion. That would give iQIYI an implied valuation of some $5 billion.
That WSJ report was carried widely by other media, including Variety after unsuccessful attempts to verify the information.The rebuttal was posted Friday on Baidu’s own microblog.
Baidu has had a turbulent year with some of its forms of advertising and search result presentation questioned by Chinese regulators. In July a move by Baidu’s Robin Li and iQIYI founder Gong Yu to take the unit private collapsed when shareholders said the $2.8 billion offer was too low. A successful sale of iQIYI might have represented a change in Baidu’s fortunes.
Baidu acquired 80% of iQIYI in 2012 and integrated it closely with its search functions. Now the emphasis at iQIYI is less on bolstering its already impressive usage figures, and more on building subscription revenue through premium content. That has necessitated moves into production, kept iQIYI in loss, and increased iQIYI’s drain on Baidu.