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Original title: Baidu gets married YY Suddenly, in the muddy waters, this “marriage” can cook mature food?
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In the absence of cloudy water, Baidu may need to conduct a second due diligence on YY’s domestic live streaming business as soon as possible. Although the merger agreement between the two parties may or may not be suspended, it is at least necessary to capture the real data so that Baidu can tackle such challenges now and in the future. medium.
On November 18, Muddy Waters Research, a well-known short seller, publicly stated on social media that 90% of Huanju Live Broadcasting (YY) revenue was bogus and 80% of Bigo Live revenue from the foreign version of YY were fake. After the short sales report was released, YY’s stock price fell 23.37% and its market value evaporated by $ 1.8 billion (about 11.8 billion yuan) that day.
According to the report, Muddy Water suspected that YY was fraudulent in three respects: First, 50% of the virtual gifts that question Huanju come from the company’s own server and the other 40% come from abroad.robotOr the “inner loop” anchor itself. Second, to question that the main anchor’s income is not as high as the outside world imagined due to counterfeit virtual gifts. Third, the union that questioned the presenter’s management also participated in the fraud. Based on the comparison between YY’s financial report and the top five guilds’ corporate credit report, Muddy Waters questioned that the revenue of these guilds in 2018 was less than 15% from YY’s announcement.
In keeping with the usual Muddy Water pattern, this time I cut YY, there was a field survey of YY’s office in a certain location, and internet celebrity income data derived from the population in charge was seriously inconsistent with assessments external. Analysis and comparison of YY financial report and SBA corporate credit report were also There are real-time observations of celebrity live broadcasts online, and the form and content are available.
On November 19, Huanju Group responded to Muddy Waters ‘brief report saying that Muddy Waters’ report was filled with ignorance about the live streaming industry and the ecology of live streaming. The report contained many errors with unclear logic, chaotic data, and bias.
And this incident happened just when Baidu was about to “marry” YY’s national live broadcast business. This “marriage” worth 23.7 billion suffered variables, can you still cook?
If the Muddy Water Report data analysis and conclusions are established, YY’s business and revenue will be seriously “mixed up.” What Baidu values is precisely YY’s stake in core resources such as anchors and users, as well as its outstanding liquidity capabilities. The reason Baidu is willing to invest heavily in acquiring YY’s domestic live streaming business is to acquire its high-quality anchor resources and well-paid users, and graft it with its own traffic to open a channel for realization. of traffic.
Live streaming and short videos are becoming important topics for Baidu’s efforts. Baidu hopes to get more new services beyond search and information flow. However, the market for live streams and short videos is extremely competitive. If the YY business form is mature and the revenue monetization ability can be harnessed, a strong national live streaming team, technology and related resources will help Baidu gain considerable market share in the above fields and improve its competitiveness.
However, this is all based on the premise that the business data presented by YY is true and effective. Otherwise, what Baidu buys is an empty commercial shell, which will not only cause the investment of tens of billions of funds to be lost, but what is even scarier is that the merger plan and the deduction for developments based on the previous business model are no longer realistic. Thus delaying the opportunity for development. For Baidu, which is itself a publicly traded company, its mistakes in decision making and net financial losses will inevitably have a serious impact on performance, share prices and even investor confidence.
Due to major investment mistakes, publicly traded companies have a ripple effect on their own business development, financial condition, and company reputation. These cases are not rare. Once all the allegations of Muddy Waters shortening YY are true, Baidu will also have to endure doubts about its due diligence and its ability to control risk in the investment market. You will also face legal liability and financial recovery from third party compensation due to the loss of shareholder capital caused by the investment. For losses, pressure from public opinion, provision for bad debts, etc., investors may even question that directors, supervisors and senior executives did not strictly adhere to the external investment review procedures and due diligence established by him in the process. investment mergers and acquisitions, or failed to comply with due diligence and reasonable care. obligation.
It can be seen from this that the seemingly win-win “marriage” between Baidu and YY was suddenly disrupted by the murky water, and the risks and variables it brought suddenly increased. In the recent Baidu 2020 third quarter earnings conference call, Baidu CEO Robin Li replied that Baidu has 300 million daily active users, and the acquisition of YY is very natural for the realization of traffic. As a large-scale live streaming platform, YY has accumulated a wealth of experience, and Baidu Live has a lot to learn from. The YY team is also very happy to receive the traffic provided by Baidu.
Faced with a shortage of cloudy water, Baidu may need to conduct a second due diligence on YY’s domestic live streaming business as soon as possible. Although it is difficult to say whether the merger agreement between the two parties can be suspended, it is at least necessary to capture the information from real data so that Baidu can meet those challenges now and in the future. medium.
□ Yuanshan (financial commentator)
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