Yahoo Finance's Emily McCormick and Kristin Myers discuss Baidu's latest earnings results, along with news that iQiyi is co-operating with an investigation from the Securities and Exchange Commission.
Shares of iQiyi tumbled on Friday after the launch of an SEC probe into fraud allegations against the company. Yahoo Finance's On the Move panel discusses.
Shares of iQiyi Inc. plunged 15% on heavy volume Friday, in the wake of the China-based streaming video service's disclosure of an investigation by the Securities and Exchange Commission related to certain acquisitions and investments. Trading volume was 38.5 million shares, enough to make the stock the 7th-most actively traded on major U.S. exchanges, and more than 7-times the full-day average. The SEC investigation follows a report issued by short seller Wolfpack Research in April. Analyst Rob Sanderson at Loop Capital Markets said said investors "should not be incrementally rattled by the announcement of the SEC investigation," as the lack of content and heavy post-COVID-19 attrition was already well known. The disclosure of the investigation was in the company's second-quarter earnings report out late Thursday, in which iQiyi reported a narrower-than-expected loss and revenue that rose more than forecasts, according to FactSet, while online ad revenue and subscribers missed, Loop's Sanderson said. Separately, the stock's selloff was helping knock Baidu Inc.'s stock down 6.1%. In Baidu's second-quarter report, the China-based internet search and marketing company said revenue iQiyi represented about 27% of total revenue. Year to date, shares of iQiyi have shed 12.4% and Baidu have lost 7.5%, while the iShares MSCI China ETF has rallied 12.6% and the S&P 500 has gained 4.5%.