Recently, iqiyi released its unaudited financial report for the second quarter up to June 30, 2020. According to the financial report, iqiyi’s total revenue in the second quarter of 2020 will reach 7.4 billion yuan, a year-on-year increase of 4%. The operating loss was RMB 1.3 billion, with an operating loss rate of 17% and an operating loss rate of 26% in the same period of 2019. By the end of the second quarter, iqiyi had 105 million subscribers. < / P > < p > by taking the four parts of iqiyi’s business apart, we can see that the revenue of its membership service and content distribution business has increased. Among them, the revenue from member services was 4 billion yuan, an increase of 19% over the same period last year, accounting for more than half of the total revenue. Content distribution revenue was RMB 860.6 million, an increase of 66% over the same period in 2019. < / P > < p > in the second quarter, it launched popular dramas and variety shows such as “secret corner”, “youth has you 2” and “I am the creator 2”. However, as of June 30, 2020, the total number of subscription members of iqiyi increased by only 4% to 104.9 million year-on-year, significantly slowing down. < / P > < p > from Q1 2019 to Q4 2019, the growth rates of subscription members are 58%, 50%, 31% and 22% respectively. In the first quarter of this year’s financial report, iqiyi said that it benefited from the positive effects of the epidemic on the online entertainment industry, and its subscription membership reached 119 million, an increase of 23% year-on-year. This means that the data will continue to decline if there is no epidemic push. < / P > < p > this is also the reason why iqiyi launched new payment modes such as advanced demand and Star Diamond VIP. With the growth of its members entering the bottleneck period, iqiyi is constantly tapping the value of existing members. < / P > < p > in the first quarter of this year, the platform launched advanced VOD under the pressure of public opinion, resulting in users who have become paying members to pay more for unlocking more episodes. Despite a large number of negative comments, iqiyi said at the Q1 financial report meeting in 2020 that the project helped the platform achieve revenue growth and said it would continue to promote. After the successful trial, iqiyi launched Star Diamond VIP in May this year, hoping that diversified payment can become the second growth point of members’ business income. < / P > < p > in order to achieve this goal, iqiyi has continuously invested in the content level in recent years to improve the willingness of users to pay, especially for self-made content. According to the incomplete collation of “advertising resources express”, iqiyi has broadcast and not broadcast as many as 30 homemade plays in 2020, including some popular dramas such as “secret corner” and “blame you for being too beautiful”. In the aspect of variety show, we also launched “youth has you 2” and other programs that have received widespread public attention. Even in the first quarter, when the variety show production was delayed or cloud recording was urgently transferred due to the epidemic situation, iqiyi still maintained a new volume of 10 films. < / P > < p > all these prove iqiyi’s production ability and help the company improve its performance. According to the financial report, due to the increase of high-quality content distributed to other platforms in this quarter, its content distribution revenue increased by 66% to 860.6 million yuan compared with the same period in 2019. The income from membership business also increased by 19% to 4 billion yuan over the same period last year. According to iqiyi’s financial report, the revenue cost of iqiyi in this quarter was 6.8 billion yuan, down 2% from the same period in 2019. But the decline is due to lower bandwidth costs and the exemption of cultural business construction fees this year, rather than the decline in content costs. On the contrary, the cost of content in this quarter even increased by 2% to 5.1 billion yuan compared with the same period in 2019. On the other hand, iqiyi has to guard against increasingly powerful competitors. In addition to Tencent and Youku, byte hop has also been actively exploring the field of long-term video in recent years. Relying on its strong flow foundation and financial resources, it has continuously purchased film and TV series copyrights. For the lack of self-control ability, byte hop is also making up for by investing in companies with production experience such as Taiyang Chuanhe. < / P > < p > in addition, the online advertising business and other businesses of iqiyi’s four major businesses (member services, online advertising services, content distribution and other businesses) also failed to grow as expected. < p > < p > due to the epidemic situation, the brand side had to reduce advertising, which led to the decline of iqiyi’s advertising revenue in this quarter. But this part is uncontrollable factors, for iqiyi, it is not a hard injury. What is worth noting is that the development of its other businesses, including e-commerce and live broadcasting, which has been placed high hopes on, is also unsatisfactory. According to the financial report, iqiyi’s other income was 918.9 million yuan, down 6% from the same period in 2019, continuing the continuous decline in the previous two quarters. < / P > < p > it is worth mentioning that Liu Yuxin and Yu Shuxin, who are popular in the program “youth has you 2” this quarter, have carried goods for nearly 20 brands and the whole team of The9 has also won the endorsement of 15 + high-end brands such as YSL, Armani, Dior, etc., the revenue of other businesses has not been boosted. It can be seen that the IP commercialization realization mode created by iqiyi has not yet run smoothly. In addition, iqiyi seems not optimistic about its future revenue. It said in the financial report guidelines that the total net income in the third quarter of 2020 will be between 6.95 billion yuan and 7.4 billion yuan, a decrease of 6% year-on-year. This is very disadvantageous for iqiyi, which has been in a loss for a long time. < / P > < p > from 2015 to 2019, iqiyi has always been in a state of loss and more and more losses. The net losses in these five years were 2.575 billion yuan, 3.074 billion yuan, 3.736.9 billion yuan, 9.1 billion yuan and 10.28 billion yuan respectively. Its net cash from operating activities also changed from positive to negative. In the same period of last year, the index data of iqiyi was 890 million yuan, and this quarter was -1.358 billion yuan. < p > < p > at the end of 2019, iqiyi members and the president of overseas business group Yang Xianghua said publicly that iqiyi was planning to increase membership fees. And has successively launched advanced VOD, Star Diamond VIP, and has achieved certain results, but now it has been involved in financial fraud. < / P > < p > in April this year, Wolfpack research released a short report, which said iqiyi exaggerated the number of its member users by 42% – 60% and its revenue by 8-13 billion yuan. In addition, the report said iqiyi exaggerated its content, other assets and the cost of the acquisition payment, hiding its fraud from auditors and investors in the form of burning counterfeit money. < / P > < p > although it strongly denies the problems pointed out in the report and cooperates with the SEC’s investigation at the request of the US Securities and Futures Commission, iqiyi said that it could not predict the end time, results and consequences of the investigation. In view of the recent setbacks of Chinese enterprises in the US business and the short report, iqiyi has another uncertainty in the US stock market. Two months after the short report was issued, there were news that Tencent would acquire iqiyi and that it would go to Hong Kong for secondary listing in the near future. < / P > < p > although there are a lot of external rumors, I am afraid that the way to go after iqiyi depends on the final investigation results of this “financial fraud case”.