SAN FRANCISCO, April 17, 2020 /PRNewswire/ -- Hagens Berman urges investors in iQIYI, Inc. (NASDAQ: IQ) who have suffered significant losses to submit their losses now. A securities fraud class action has been filed and certain investors may have valuable claims.
iQIYI (IQ) Securities Class Action:
The complaint alleges that Defendants misrepresented and concealed material facts about iQIYI's business and financial performance. Specifically, the complaint alleges that Defendants inflated iQIYI's revenue figures, user numbers and operational expenses to cover up other fraud.
Investors began to learn the truth, according to the complaint, on Apr. 7, 2020, when Wolfpack Research published a scathing report, "iQIYI: The Netflix of China? Good Luckin." According to Wolfpack, the company was committing fraud well before its 2018 IPO and has continued to do so ever since. Wolfpack estimates that (a) iQIYI inflated its 2019 revenue by 27% - 44%, (b) overstates its user numbers by 42% - 60%, and then (c) inflates its expenses, the prices it pays for content, and other assets and acquisitions in order to burn off fake cash to hide the fraud from its auditors and investors.
In addition, according to Wolfpack "[a]rguably one of the most egregious examples of accounting fraud IQ commits is the inflation of barter revenue" whereby barter sublicensing revenues are determined by internal estimates of the value of traded content, allowing management to unilaterally assign inflated values to the transactions.
This news drove the price of iQIYI ADSs sharply lower during intraday trading on Apr. 7, 2020.
"We're focused on investors' losses and proving iQIYI misled investors about the company's revenues, user numbers, and operational expenses to appear more successful," said Reed Kathrein, the Hagens Berman partner leading the investigation.
Whistleblowers: Persons with non-public information regarding iQIYI should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email [email protected].
About Hagens Berman
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Reed Kathrein, 844-916-0895
SOURCE Hagens Berman Sobol Shapiro LLP