Reuters
Shares of iQiyi, a Chinese netflix service, recorded up to 18% in pre-market operations on Friday after the company said the U.S. Securities and Exchange Commission had launched an investigation into the matter.
The SEC probe comes after an April report from Wolfpack Research, a short-seller firm, alleged that the company “was committing fraud well before its IPO in 2018 and has continued to do so ever since.” The report called into question iQiyi’s user numbers, sales, expenses, and the 2018 acquisition of Chengdu Skymoons Digital Entertainment.
He also stated that, following the publication of the Wolfpack report, he had hired advisers to conduct an internal review of the allegations.
Read more: MORGAN STANLEY: Buy those nine rated stocks now to get market returns of 15% or more over the next 3 months
Shares of Baidu, a Chinese search engine giant and iQiyi’s majority shareholder, also fell five in pre-market operations on Friday.
The announcement of the SEC investigation comes when the United States is stepping up surveillance of Chinese companies listed on U.S. stock exchanges following a series of recent accounting scandals, Luckin Coffee, which has made sales.
iQiyi won about 5% from the start of the year to Thursday’s end.
Market Insider