“Netflix of China”, iQIYI Under Fire for Reportedly Inflating Revenue and Subscribers
Chinese streaming service, iQIYI is currently under fire by the SEC after being accused of inflating its revenue and subscribers, the South China Morning Post reports. Nicknamed “China’s Netflix,” iQIYI has being investigated after accusations cited by Wolfpack Research and Muddy Waters claim the company inflated their 2019 revenue by up to 44 percent, and its user numbers by 60 percent.
The company claims to have 104.9 million subscribers and expected 6.96 billion yuan in revenues next quarter.
The SEC will be probing into “financial and operating records” going all the way back to the top of 2018. The SEC will also be looking into “documents related to certain acquisitions and investments that were identified in a report issued by short-seller firm Wolfpack Research in April 2020,” the company revealed in their Q2 financial results.
For their part, the streamer is working with professional advisers who will do an internal review aimed at getting to the bottom of the accusations lobbied by the Wolfpack Report. The company is trying to see if “manufacturing orders, revenue or expenses had been inflated,” according to the South China Morning Post.
In their Q2 earnings report, iQIYI claimed operating losses narrowed by 600 million yuan to 1.3 billion yuan year-over-year, while total revenue rose four percent to 7.4 billion yuan. The service also revealed that subscribers went up by four percent, and are now at 104.9 million.