Chinese video streaming giant, IQiyi just went public in the United States with an initial public offering price of 18 dollars per share—the middle of its marketed range. It raised 2.25 billion, making it the second biggest IPO in the U.S. this year and the biggest Chinese listing in the U.S. since Alibaba.
CGTN America’s Karina Huber reports.
With the ringing of the opening bell at the NASDAQ on Thursday, shares of IQiyi – the Netflix of China, began trading under the ticker “IQ” in the United States.
The first trade came in at $18.20 a share, which was 20 cents higher than its initial public offering price but closed at $15.50. The company raised $2.25 billion in the offering.
According to its securities filing, IQiyi – majority owned by Baidu – will use half the money to “expand and enhance” its content offerings as it goes head-to-head with rivals Tencent and Alibaba in the streaming video space.
IQiyi’s IPO comes on the heels of several disappointing Chinese offerings in the United States this year. Huami, a fitness tracking company, that launched in February, is currently trading below its IPO price—which is unusual for a tech stock. Chinese app maker, Bilibili, which went public on Wednesday, is also trading under its initial price.
Traders at the New York Stock Exchange say there is still lots of interest in Chinese companies, but U.S. investors are also more hesitant than in the past.
“With trade embargoes, trade tariffs and trade war and trade this and trade that, I think even though some of these companies have really nothing to do with that space, I think the overall impression or the overall sentiment towards Chinese equities is probably not as good as it once was,” said Peter Costa, President at Empire Executions.
Another trader says investors are pickier now, because of softness in the market. The S&P 500 is down five percent from a month ago.
“Now you’re seeing investors that are a little more patient. They’ve seen these IPOs price weekly. They’ve watched the fast money get out of them and then they get into them when they think there’s some kind of discount,” said Matt Cheslock, Equity Trader at Virtu Financial.
In 2017, 16 Chinese companies went public in the U.S.—raising around $3.4 billion.
The expectation was that 2018 would be an even bigger year for Chinese listings in the U.S. But with these disappointing IPOs, some Chinese companies might list in Hong Kong, instead of the U.S., when it’s time to go public.
Rebecca Fannin talks about China’s streaming video services industry
CGTN’s Sean Callebs spoke to Rebecca Fannin, founder and editor of Silicon Dragon News about China’s entertainment industry and how videostreaming services will grow in the future