NEW YORK, Sept. 25, 2020 (PRNEWSWIRE) Pomerantz LLP announces that a class action lawsuit has been filed against Baidu, Inc. ("Baidu" or the "Company") and certain of its officers. The class action, filed in United States District Court for the Eastern District of New York, and docketed under 20-cv-04660, is on behalf of a class consisting of all persons other than Defendants who purchased or otherwise, acquired Baidu securities between April 8, 2016 and August 13, 2020, both dates inclusive (the "Class Period"). Plaintiff seeks to recover compensable damages caused by Defendants' violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder.
If you are a shareholder who purchased Baidu securities during the class period, you have until October 19, 2020, to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
Baidu purports to provide Internet search services in China and internationally. It operates through two segments, one of which is iQIYI. The iQIYI segment provides online entertainment services, including original and licensed content, membership services, and online advertising services.
In November 2012, Baidu obtained the controlling interest in what was then named Qiyi.com, Inc. (now iQIYI, Inc.) ("iQIYI"). In early 2018, iQIYI held its initial public offering and was listed on the NASDAQ exchange. Baidu is still the majority owner of its subsidiary, iQIYI.
The complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operational, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Baidu misrepresented the financial and business condition of iQIYI; (ii) iQIYI had inadequate controls; and (iii) as a result, Defendants' public statements were materially false and/or misleading at all relevant times.
On May 16, 2019, during after-market hours, Baidu issued a press release announcing its financial and operating results for the first quarter of the fiscal year 2019 (the "1Q19 Press Release"). That press release reported, among other results, that Baidu had recorded its first GAAP (generally accepted accounting principles) loss for the first time in 15 years. Specifically, for the first quarter of 2019, Baidu reported an operating loss of RMB936 million ($139 million), compared to an operating income of RMB4.6 billion for the first quarter of 2018. Baidu attributed these results, in part, to content costs of RMB6.2 billion ($917 million), representing an increase of 47% year over year, which the Company advised was "mainly due to increased investments in iQIYI content."
On the same date, also during after-market hours, Baidu hosted an earnings call with investors and analysts to discuss the Company's first quarter 2019 results (the "1Q19 Conference Call"). On that call, Defendant Yu explained that Baidu's "total revenues reached CNY 24.1 billion, up 15%, or 21%, excluding spinoff revenue of CNY 1.1 billion," but, "[a]t the same time, [the Company] incurred net loss of CNY 327 million due to [inter alia] . . . increased loss from iQIYI," noting that "[c]ontent cost was up 47% to CNY 6.2 billion, mainly due to iQIYI's increased investment in content."
Following the 1Q19 Press Release and the 1Q19 Conference call, Baidu's ADSs fell $25.39 per share, or 16.52%, to close at $128.31 per share on May 17, 2019. Despite this decline in Baidu's ADS price, the Company's shares continued to trade at artificially inflated prices throughout the remainder of the Class Period as a result of Defendants' continued misstatements and omissions related to iQIYI.
For example, on March 13, 2020, Baidu filed with the SEC its annual report for the year ended December 31, 2019 on a Form 20-F signed by Defendant Y. Li (the "2019 20-F"). Attached to the 2019 20-F were SOX certifications signed by Defendants Y. Li and Yu attesting to the accuracy of financial reporting, the disclosure of any material changes to the Company's internal control over financial reporting, and the disclosure of all fraud.
The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com.
Robert S. Willoughby
888-476-6529 ext. 7980
SOURCE Pomerantz LLP