Charts of the Day: Losses Grow at Short Seller-Targeted Chinese Video Firm

A major Chinese video streaming platform targeted by an American short seller has reported bigger losses amid the fallout of the new coronavirus pandemic.

Nasdaq-listed iQiyi Inc.’s net losses rose 61% year-on-year to 2.9 billion yuan ($406 million) in the first quarter this year, according to its latest earnings report released last week.

The earnings release came one month after short seller Wolfpack Research released a report accusing the company of overstating its revenue and user numbers, while iQiyi said the report contained “numerous errors, unsubstantiated statements and misleading conclusions and interpretations.”

In the first quarter, iQiyi’s revenue and costs of revenue both grew 9% year-on-year, according to the earnings report. Content costs, which accounted for nearly three-quarters of its total costs, climbed 11%.

Revenue from online advertising services plunged 27% year-on-year due to a challenging economic environment caused by the pandemic, the company said. The reading marks the steepest quarterly drop since its IPO in March 2018 and the fourth straight quarterly decline.

IQiyi’s number of subscribers, however, climbed 23% year-on-year to nearly 120 million at the end of March, amid “increased entertainment demand” during the pandemic, the company said. The reading was slightly higher than 22% growth at the end of December.

Other video streaming platforms saw a similar trend. Tencent Video, a rival of iQiyi owned by internet giant Tencent Holdings Ltd., saw a year-on-year increase of 26% in subscriptions at the end of March.

Contact reporter Wang Xintong (xintongwang@caixin.com) and editor Lin Jinbing (jinbinglin@caixin.com)