{ "docId": "019dd923-622c-750b-8b9a-83df2d8136b6", "docSlug": "40a11d17abe5", "documentTitle": "Qutoutiao, Inc. (QTT)", "authorId": "60_Wolfpack_Research", "authorName": "Wolfpack Research", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2020-01-17 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 7, "pageCount": 23, "prevPage": 6, "nextPage": 8, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 4, "notes": "This is a research note from Wolfpack Research attacking QTT's acquisition of Dianguan.", "elementsJson": [ "paragraph", "bullet_list", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b9a-83df2d8136b6/7", "deckHref": "/decks/019dd923-622c-750b-8b9a-83df2d8136b6", "deckJsonHref": "/decks/019dd923-622c-750b-8b9a-83df2d8136b6.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b9a-83df2d8136b6#slide-7", "components": [ { "bbox": null, "kind": "callout", "text": "QTT went to great lengths to attempt to justify the acquisition of Dianguan. In our opinion, this section of QTT's response is entirely disingenuous.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-70f7-7334-b224-efbc0a119013", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.8, "x": 0.1, "y": 0.82 }, "kind": "list", "text": "The domain name was originally registered by an “@innotech.com” email address in September 2017, two months before Dianguan was founded and 6 months before the acquisition – Innotech, Ltd.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "215c0f98-c31e-4563-9e5a-cd464ec33146", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.8, "x": 0.1, "y": 0.73 }, "kind": "list", "text": "The “contact us” button at the bottom of the page still doesn’t function at all – in fact, the “contact us” button was completely removed from the site on January 16, 2020.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "76bdb363-5713-4633-862a-aa3443b19418", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.8, "x": 0.1, "y": 0.67 }, "kind": "list", "text": "While the site appears to have a login module, our Chinese investigators were unable to register for an account. The form we submitted more than a month ago has yet to be answered by QTT, Dianguan or anyone else.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "94f13685-3380-440e-9579-7bcca003d693", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.8, "x": 0.1, "y": 0.78 }, "kind": "list", "text": "The privacy policy appears to have been lazily copied from another company, Shanghai Shenlan Network Technology Co., Ltd., which QTT/Dianguan left in section 4.3 of the agreement.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d96cb29a-9fa2-40f5-80f1-11fb5b8d9c37", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.8, "x": 0.1, "y": 0.12 }, "kind": "paragraph", "text": "16% fee on Jifen's gross revenues – this is 8x the 2% commission that QTT claimed Dianguan charged for agency services prior to the acquisition.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "5aa6b7d7-88ce-4afe-aeeb-2906023807fb", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.8, "x": 0.1, "y": 0.17 }, "kind": "paragraph", "text": "In 2017, Dianguan reported revenues of RMB 1,348,000 in both its credit reports and SAIC filings. We found it interesting that these reports matched prior to QTT's acquisition of Dianguan...", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "fef577ea-942e-4bf4-b004-f239cb922e0f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.74, "x": 0.13, "y": 0.43 }, "kind": "quote", "text": "As our business grew rapidly and substantially, it made perfect sense to start building our own distribution capabilities, i.e., an in-house advertising platform...", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d55aa20e-3bf9-4962-bec1-c987bcfc7c02", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "As our business grew rapidly and substantially, it made perfect sense to start building our own distribution capabilities, i.e., an in-house advertising platform. The benefit of owning an in-house advertising platform is not only enhanced monetization efficiency as we can improve advertising technology for better matching of supply and demand which results in higher average revenue per user ( ARPU ), it also allows our business to become independent and obtain long-term viability. — QTT", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-70f7-7334-b224-f220e36d03fa", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.8, "x": 0.1, "y": 0.33 }, "kind": "title", "text": "5. QTT's attempt to explain its rationale for the Dianguan acquisition highlight the absurdity of its story about this undisclosed related party acquisition:", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "86198e5c-e300-49e2-a4cf-4cda1c68be87", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }