Shares of iQIYI (IQ) – Get Report rose Monday after the Chinese online entertainment company said an internal review had refuted a short seller’s allegations that it inflated revenue and user numbers.
It also said it will continue to cooperate with a Securities and Exchange Commission inquiry.
Iqiyi American depositary receipts recently traded at $23.49, up 2.8%. The stock has climbed 11% year to date.
In April, short seller Wolfpack Research accused iQIYI, which competes with Tencent (TCEHY) , of inflating its 2019 revenue by some $1.13 billion to $1.98 billion, or between 27% and 44%.
Iqiyi, which is 56% owned by Chinese internet titan Baidu (BIDU) – Get Report, also inflated its expenses, the prices it pays for content, acquisitions and other line items to burn off fake cash positions and hide the fraud from investors and auditors, Wolfpack said.