Chinese video streaming platform IQIYI’s pre-market gain widened to 40% as multiple Chinese media reported that Tencent had approached Baidu, which owns 56.2% of iQIYI, with the plan of becoming iQIYI’s largest shareholder. Meanwhile, Baidu’s stock price has risen nearly 7%.
A person familiar with the matter said Tencent had approached Baidu about buying an unspecified stake, but it was unclear whether it had contacted iQIYI about the matter. Moreover, sources said the plan was still in its very early stages.
Currently, the three biggest video streaming platforms iQIYI, Youku and Tencent Video are controlled by BAT (Baidu, Alibaba and Tencent) respectively. If the purchase is to take place, the landscape of Chinese video platforms and tech giants would change significantly.
On May 19, iQIYI released its unaudited financial results for the first quarter ending March 31, 2020. In the first quarter of 2020, iQIYI’s total revenue reached 7.6 billion yuan (about $1.1 billion), up 9% from the same period last year, with the total revenue and year-on-year growth exceeding the company’s previous expectations.
At the end of the first quarter, iQIYI had 119 million paying subscribers, up 23% from the same period last year, and a net increase of 12 million subscribers in a single quarter.