iQiyi Debuts on Wall Street, Stock Tanks on Day One
The Beijing-based company raised $2.25 billion by issuing shares at the mid-point of its pricing range, suggesting before the trading day a market value of more than $13 billion.
The much-anticipated $2.25 billion initial public offering of iQiyi Inc. (Nasdaq: IQ) quickly fizzled today as the company's stock dropped nearly 14 percent by the end of its first day of trading.
After Yu Gong, founder & CEO of iQiyi Inc., China's largest online video and entertainment service provider, rang the opening bell, the stock opened at $18.20 per American depositary share and climbed briefly. However, with 125 million ADS offered at $18 per share, shares promptly reversed course.
The slide continued throughout the day, as the spinoff from China search-engine leader Baidu Inc. (Nasdaq: BIDU) failed to hold its ground. IQiyi closed today at $15.55 per share, down $2.45, or 13.6 percent. The company was the largest percentage loser among the 150 Chinese ADSs tracked by CapitalWatch.
The IPO of the Beijing-based company suggested the market value of the company at more than $13 billion. If today's drop is any indication, however, that's looking a bit closer to $11 billion.
After completion of the deal, Baidu, China's top search engine, will continue to be the company's controlling shareholder, including holding all of the super-voting Class B shares, giving it voting control of more than 93 percent of the company, iQiyi said in its filing. Each ADS represents seven Class A ordinary shares. Baidu currently holds roughly 70 percent of iQiyi's shares. IQiyi accounts for about 20 percent of Baidu's revenue.
Goldman Sachs (Asia) LLC, Credit Suisse, and BofA Merrill Lynch were lead underwriters on the deal.