https://finance.yahoo.com/news/...nal-stocks-investors-181100566.html
Andy Cross: I'm Motley Fool Chief Investment Officer Andy Cross. At our recent Motley Fool member event in Denver, Colorado, The Motley Fool's Chris Hill talked with analysts Aaron Bush, Bill Mann, and Matt Argersinger about some of their favorite global investment opportunities. Chris kicked things off by asking Matt about a company that's been called the Netflix of China.
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Chris Hill: Alright, let's move on to the stocks themselves. You guys just jump in. iQiyi.
Matt Argersinger: Yes, iQiyi, a company that actually just came public earlier this year. It's been called, in a lot of contexts, the Netflix of China. I hate using those lazy monikers, because I use them too much, but I'll use another one -- I tend to think of it as the YouTube of China more because it derives about 50% of its revenue from advertising on free videos that people watch, and there's advertising with that. The other 50% is premium subscriptions.
This is a business that, last quarter, grew its subscriber base 75% to 67 million. It's growing tremendously. It was founded by Tim Yu in 2010. Baidu took a controlling stake in 2012. Then it was spun out of Baidu, at least partly, earlier this year. Baidu still controls roughly a 60% stake in the business. You look at the market cap of the business, $17.6 billion. Comparing that to Netflix makes you think, "Wow, there's some opportunity here," because Netflix is about eight or nine times bigger. You look at the market of China, and it looks bigger.
But, there is some competition for iQiyi. Tencentvideo is a big competitor. Alibaba also has an online video business. But in my mind, and I think in our minds, iQiyi has the lead. They've got, of course, the Baidu pedigree, the Baidu data and artificial intelligence that's really driving a lot of their content decisions. And in 2017, I thought this was tremendous, 42 of the top 50 viewed videos, films, movies, TV shows in China were either owned or distributed by iQiyi. That gives you some indication of their dominance in the market.
Bill Mann: It really can't be overstated culturally how different videos, help videos and things like that, are viewed in China than they are in the United States. They are very, very heavy consumers of these exact type of content that iQiyi dominates.
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