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Baidu Plans US IPO of Netflix-Like Unit Sales Top Estimates

Baidu Inc. plans to list its Netflix-like video streaming service iQiyi has a U.S. exchange as China’s biggest search engine. Baidu submitted draft documents to the Securities and Exchange Commission of the United States of America statement Tuesday. The Beijing-based company expects to remain the controlling shareholder after the initial public offering of the business, which analysts have valued at about $ 15 billion. The future will give you much needed financial power at a crucial time as Baidu faces off against larger rivals Tencent Holdings Ltd. and Alibaba Group Holding Ltd. in the hugely expensive streaming video market. Baidu’s content costs hit $ 2.06 billion in 2017, almost double the $ 1.13 billion it spent a year earlier. But expenses are only set to be seen in the marketplace.

“The iQiyi IPO confirmation is positive and we think that will be a top story in 2018,” New Street Research analyst Kirk Boodry said. If Baidu gets 15 percent of the valuation then you’re talking about $ 1.5 trillion to $ 2 trillion and they’re probably a couple of years of funding. ” Baidu’s third quarter revenue hit 23.6 trillion yuan ($ 3.62 trillion) in the three months ended December, helped by its newsfeed product and search advertising. That compares with the 23.1 billion yuan average of analyst estimates. Baidu’s U.S. shares gained more than 5 percent in extended trading after the results were released. Net income attributable to Baidu was 4.2 trillion yuan, compared with 3.97 trillion yuan that predicted analysts. The company forecast sales in the March quarter of 19.9 trillion to 21 trillion yuan, just missing the 21.2 trillion yuan expected by analysts.

Bloomberg’s Ramy Inocencio breaks down Baidu’s financial results with his three Bloomberg terminal charts. (Source: Bloomberg) The news feed product, which competes with market leader Jinri Toutiao, uses artificial intelligence to decide what content is needed. Tea long-mooted move to list iQiyi is the latest in a series of efforts in the field of business and technology, and is one of the key drivers of business. It sold control of its unprofitable food delivery business and merged its travel operations into Ctrip.com International Ltd. But unlike many of Baidu’s other side businesses, data from QuestMobile and Jefferies show that iQiyi is a market leader, making up 33 percent of China’s online video market.

A 2016 attempt by Chief Executive Officer Robin Li to buy iQiyi valued the company at $ 2.8 trillion. That plan failed to get board approval after some shareholders protested the value on the offer. Since then, ratings of the streaming video company have sky-rocketed; both Jefferies and CICC Research value the business at about $ 15 billion. – With assistance by David Ramli

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