U.S.-based securities analysis firm and activist investor Wolfpack Research has publicly accused Chinese streaming platform iQIYI of fraud.

iQIYI “massively [inflated] its user numbers and revenue while at the same time hiding the fraud from auditors and investors by overpaying for content, acquisitions and other assets,” Wolfpack said. “IQIYI is nearing its 10-year anniversary and it has never been profitable and its losses are accelerating. Although people call it the ‘Netflix of China,’ it is far from Netflix.”

In a short statement, iQIYI replied: “The company believes that the [Wolfpack] report contains numerous errors, unsubstantiated statements and misleading conclusions and interpretations regarding information relating to the company.”

IQIYI was spun-off from Chinese search market leader Baidu in a March 2018 IPO, with ADR shares offered at $18 each. Its stock traded up 3.22% at $17.30 per ADR on Tuesday, but slipped to $16.68 after hours. At the closing price, the company has a market capitalization of $12.7 billion.

Wolfpack says its 37-page report was “based on months of research including polling over 1,500 users in the key cities in China, digging up the Chinese credit reports, which show the real numbers, and conducting interviews with insiders and former insiders.”

“We estimate [iQIYI] inflated its 2019 revenue by approximately RMB 8-13 billion, or 27%-44%. [iQIYI] does this by overstating its user numbers by 42%-60%. Then, [iQIYI] inflates its expenses, the prices it pays for content, other assets and acquisitions in order to burn off fake cash to hide the fraud from its auditor and investors,” the Wolfpack report says.

IQIYI and its rival Tencent Video have long disputed which company is China’s streaming market leader. In its fourth quarter and 2019 full year financial statement, published at the end of February, iQIYI said that it had 106.9 million subscribers, of which 98.9% were paying subscribers.

Wolfpack says the way that iQIYI booked subscription revenue is suspicious, and that iQIYI wrongly books revenue from video subscriptions brought in under dual membership schemes involving third party companies, such as credit card and phone suppliers.

Wolfpack compared the amounts of advertising revenue that iQIYI stated to investors with that filed by its advertising companies and reported to China’s State Administration for Industry and Commerce, and concluded that the company had exaggerated 2017 ad revenues by as much as three times.

Content acquisition and production are a large part of the costs of a streaming company, and Wolfpack alleges multiple frauds in this area. It said that iQIYI inflated the cost of acquired content, overstated the value of content that it bartered, and indulged in accounting tricks regarding content that had the apparent effect of turning cash outflows into positive cash flow.

Further, Wolfpack alleges that iQIYI engaged in at least two deceptive company acquisitions, one at Xin’ai Sports, the other involving a controversial games company Skymoons.

Wolfpack founder Dan David was one of the lead characters in the 2017 documentary, “The China Hustle,” which told the story of billions of dollars of fraud committed by Chinese companies against U.S. investors. One of the key points in that film was that Chinese companies must accurately report their financial details to Chinese authorities, but that they are not required to present the same information overseas.

Another well-known investment firm, Muddy Waters said via Twitter that it also has a short position in iQIYI stock.