IQiyi stock plunged Wednesday on an $800 million convertible debt offering, but shares in parent Baidu (BIDU) popped on a report it could make its own electric vehicles. Baidu stock now is extended from a cup-with-handle buy point.
In a regulatory filing, iQiyi (IQ) said it plans to use the funds to “expand and enhance its content offerings, strengthen its technologies and for working capital.”
The iQiyi internet video streaming business had 104.8 million subscribers as of September. It faces stiff competition in China from Tencent (TCEHY) Video, Alibaba Group‘s (BABA) Youku Tudou and other rivals.
Baidu consolidates the financial results of iQiyi, a Netflix (NFLX)-like video streaming service. In addition, iQiyi is unprofitable.
Baidu spun off iQiyi stock in late March 2018.
IQiyi Stock: Relative Strength Rating Lags
IQiyi stock, listed on the Nasdaq, tumbled 14% to near 19.20 on the stock market today. Baidu stock rose 4.1% to 193.09.
Reuters reported that China’s internet search giant is mulling a move to make its own electric vehicles. Also, Baidu already operates an autonomous driving unit known as Baidu Apollo.
On Dec. 4, Baidu Apollo got permission from Beijing transportation authorities to conduct fully driverless road tests in five vehicles. The announcement made Baidu the first and only company permitted to conduct driverless tests on Beijing public streets. That means there is no safety driver in the autonomous driving vehicle.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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