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  "documentTitle": "iQIYI, Inc. (IQ)",
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  "presentationDate": "2020-04-07 00:00:00",
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  "notes": "The report uses a 'short-seller' investigative tone, specifically referencing Luckin Coffee as a precedent for Chinese accounting fraud.",
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      "text": "Our research shows us that iQIYI, Inc. (“IQ”) was committing fraud well before its IPO in 2018 and has continued to do so ever since.",
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      "text": "revenue inflation: 27%-44%",
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      "text": "Our research shows us that iQIYI, Inc. (“IQ”) was committing fraud well before its IPO in 2018 and has continued to do so ever since. We estimate IQ inflated its 2019 revenue by approximately RMB 8-13 billion, or 27%-44%.",
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      "text": "Arguably one of the most egregious examples of accounting fraud IQ commits is the inflation of its barter transaction revenue... IQ would have needed to barter the licenses for ~3.9x and ~3.2x the total number of TV series episodes produced.",
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      "text": "We also obtained Chinese credit reports... we found that the deferred revenues reported to the SEC were inflated by 261.7%, 165.5% and 86.2% in 2015, 2016 and 2017, respectively.",
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      "text": "IQ does this by overstating its user numbers by approximately 42%-60%. Then, IQ inflates its expenses, the prices it pays for content, other assets and acquisitions in order to burn off fake cash to hide the fraud from its auditor and investors.",
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      "text": "We conducted in person surveys of 1,563 people... found that approximately 31.9% of IQ users have access to its VIP-only content through their memberships with IQ’s partners such as JD.com or Xiaomi TV.",
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      "text": "1 IQ only barters non-exclusive licenses: 2018 20-F, p. F-24. 2 According to China’s SARFT, there were 10,646 total TV episodes produced in China in 2019 and 13,726 episodes produced in 2018.",
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      "text": "iQIYI: The Netflix of China? Good Luckin",
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