Filed Pursuant to Rule 424(b)(5)
Registration No. 333-251359
Prospectus Supplement
(to Prospectus dated December 15,
2020)
76,500,000 American Depositary Shares
Representing 535,500,000 Class A Ordinary
Shares

iQIYI, Inc.
This prospectus supplement relates to an offering
by us of an aggregate of 76,500,000 American depositary shares, or
ADSs, each representing seven Class A ordinary shares, par
value US$0.00001 per share, of iQIYI, Inc. Our ADSs are listed on
The Nasdaq Global Select Market under the symbol “IQ.” The last
reported sale price of our ADSs on The Nasdaq Global Select Market
on January 13, 2023 was US$6.69 per ADS.
Investing in the ADSs involves risk. See
“Risk Factors”
beginning on page S-13 of
this prospectus supplement for a discussion of certain risks that
you should consider in connection with an investment in the
ADSs.
iQIYI, Inc. is not a Chinese operating company, but
rather a Cayman Islands holding company with no equity ownership in
the variable interest entities, or the VIEs. Our Cayman Islands
holding company does not conduct business operations directly. We
conduct our operations in China through (i) our PRC
subsidiaries and (ii) the VIEs with which we have maintained
contractual arrangements and their subsidiaries in China. PRC laws
and regulations impose certain restrictions or prohibitions on
foreign ownership of companies that engage in certain value-added
telecommunication services, internet audio-video program services
and certain other businesses. Accordingly, we operate these
businesses in China through the VIEs and their subsidiaries, and
rely on contractual arrangements among our PRC subsidiaries, the
VIEs and their nominee shareholders to control the business
operations of the VIEs. The VIEs are consolidated for accounting
purposes, but are not entities in which our Cayman Islands holding
company, or our investors, own equity. Revenues contributed by the
VIEs accounted for 93%, 92%, 94% of our total revenues for the
years ended December 31, 2019, 2020 and 2021, respectively. As
used in this prospectus supplement, “we,” “us,” “our company,”
“our,” or “iQIYI” refers to iQIYI, Inc., its subsidiaries, and, in
the context of describing our operations and consolidated financial
information, the VIEs in China, including Beijing iQIYI Science and
Technology Co., Ltd. (“Beijing iQIYI”), Shanghai iQIYI Culture
Media Co., Ltd. (“Shanghai iQIYI”) and Shanghai Zhong Yuan Network
Co., Ltd. (“Shanghai Zhong Yuan”), iQIYI Pictures (Beijing) Co.,
Ltd. (“iQIYI Pictures”) and Beijing iQIYI Intelligent Entertainment
Technology Co., Ltd., (“Intelligent Entertainment”). Investors in
the ADSs are not purchasing equity interest in the VIEs in China,
but instead are purchasing equity interest in a holding company
incorporated in the Cayman Islands.
However, the contractual arrangements may not be as
effective as direct ownership in providing us with control over the
VIEs and we may incur substantial costs to enforce the terms of the
arrangements. Uncertainties in the PRC legal system may limit our
ability, as a Cayman Islands holding company, to enforce these
contractual arrangements. Meanwhile, there are very few precedents
as to whether contractual arrangements would be judged to form
effective control over the relevant VIEs through the contractual
arrangements, or how contractual arrangements in the context of a
the VIEs should be interpreted or enforced by the PRC courts.
Should legal actions become necessary, we cannot guarantee that the
court will rule in favor of the enforceability of the VIEs
contractual arrangements. In the event we are unable to enforce
these contractual arrangements, or if we suffer significant delay
or other obstacles in the process of enforcing these contractual
arrangements, we may not be able to exert effective control over
the VIEs, and our ability to conduct our business may be materially
adversely affected. For a detailed description of the risks
associated with our corporate structure, please refer to risks
disclosed under “Item 3. Key Information — D. Risk Factors — Risks
Relating to Our Corporate Structure” in our annual report on Form
20-F for the fiscal year
ended December 31, 2021 (the “2021 Form 20-F”), which is incorporated by
reference in the accompanying prospectus, and “Risk Factors — Risks
Relating to This Offering” in this prospectus supplement.
There are also substantial uncertainties regarding
the interpretation and application of current and future PRC laws,
regulations and rules regarding the status of the rights of our
Cayman Islands holding company with respect to its contractual
arrangements with the VIEs and their nominee shareholders. It is
uncertain whether any new PRC laws or regulations relating to
variable interest entity structures will be adopted or if adopted,
what they would provide. As of the date of this prospectus
supplement, to our best knowledge, our directors and management,
the contractual arrangements with the VIEs have not been tested in
a court of law in the PRC. If we or any of the VIEs is found to be
in violation of any existing or future PRC laws or regulations, or
fail to obtain or maintain any of the required permits or
approvals, the relevant PRC regulatory authorities would have broad
discretion to take action in dealing with such violations or
failures. If the PRC government deems that our contractual
arrangements with the VIEs do not comply with PRC regulatory
restrictions on foreign investment in the relevant industries, or
if these regulations or the interpretation of existing regulations
change or are interpreted differently in the future, we could be
subject to severe penalties or be forced to relinquish our
interests in those operations. Since PRC administrative and court
authorities have significant discretion in interpreting and
implementing statutory provisions and contractual terms, it may be
difficult to evaluate the outcome of administrative and court
proceedings and the level of legal protection we enjoy. Our Cayman
Islands holding company, our PRC subsidiaries and the VIEs, and
investors of our company face uncertainty about potential future
actions by the PRC government that could affect the enforceability
of the contractual arrangements with the VIEs and, consequently,
significantly affect the financial performance of the VIEs and our
company as a whole. See “Item 3. Key Information — D. Risk Factors
— Risks Related to Our Corporate Structure—If the PRC government
finds that the agreements that establish the structure for
operating certain of our operations in China do not comply with PRC
regulations relating to the relevant industries, or if these
regulations or the interpretation of existing regulations change in
the future, we could be subject to severe penalties or be forced to
relinquish our interests in those operations” and “—Uncertainties
exist with respect to the interpretation and implementation of the
newly enacted PRC Foreign Investment Law and how it may impact the
viability of our current corporate structure, corporate governance
and business operations” in the 2021 Form 20-F, which is incorporated by
reference in the accompanying prospectus.
We face various risks and uncertainties related to
doing business in China. Our business operations are primarily
conducted in China, and we are subject to complex and evolving PRC
laws and regulations. For example, we face risks associated with
regulatory approvals on offshore offerings, anti-monopoly
regulatory actions, and oversight on cybersecurity and data
privacy, which may impact our ability to conduct certain
businesses, accept foreign investments or financing, or list on a
United States or other foreign exchange. In addition, trading in
our securities on U.S. markets, including Nasdaq, may be prohibited
under the Holding Foreign Companies Accountable Act (the “HFCAA”)
if the Public Company Accounting Oversight Board (the “PCAOB”)
determines that it is unable to inspect or investigate completely
our auditor for two consecutive years. On December 16, 2021, the
PCAOB issued the HFCAA Determination Report to notify the SEC of
its determinations that the PCAOB was unable to inspect or
investigate completely registered public accounting firms
headquartered in mainland China and Hong Kong (the “2021
Determinations”), including our auditor. On April 21, 2022, we were
identified by the SEC under the HFCAA as having filed audit reports
issued by a registered public accounting firm that cannot be
inspected or investigated completely by the PCAOB in connection
with the filing of our 2021 Form 20-F. The inability of the PCAOB
to conduct inspections in the past also deprived our investors of
the benefits of such inspections. On December 15, 2022, the PCAOB
announced that it was able to conduct inspections and
investigations completely of PCAOB-registered public accounting
firms headquartered in mainland China and Hong Kong in 2022. The
PCAOB vacated its previous 2021 Determinations accordingly. As a
result, we do not expect to be identified as a
“Commission-Identified Issuer” under the HFCAA for the fiscal year
ended December 31, 2022 after we file our annual report on Form
20-F for such fiscal year. However, whether the PCAOB will continue
to conduct inspections and investigations completely to its
satisfaction of PCAOB-registered public accounting firms
headquartered in mainland China and Hong Kong is subject to
uncertainty and depends on a number of factors out of our, and our
auditor’s, control, including positions taken by authorities of the
PRC. The PCAOB is expected to continue to demand complete access to
inspections and investigations against accounting firms
headquartered in mainland China and Hong Kong in the future and
states that it has already made plans to resume regular inspections
in early 2023 and beyond. The PCAOB is required under the HFCAA to
make its determination on an annual basis with regards to its
ability to inspect and investigate completely accounting firms
based in the mainland China and Hong Kong. The possibility of being
a “Commission-Identified Issuer” and risk of delisting could
continue to adversely affect the trading price of our securities.
If the PCAOB determines in the future that it no longer has full
access to inspect and investigate accounting firms headquartered in
mainland China and Hong Kong and we continue to use such accounting
firm to conduct audit work, we would be identified as a
“Commission-Identified Issuer” under the HFCAA following the filing
of the annual report for the relevant fiscal year, and if we were
so identified for two consecutive years, trading in our securities
on U.S. markets would be prohibited. For a detailed description of
risks related to doing business in China, “Item 3. Key Information
— D. Risk Factors — Risks Relating to Doing Business in China” in
our 2021 Form 20-F, which
is incorporated by reference in the accompanying prospectus, and
“Risk Factors — Risks Relating to Doing Business in China” in this
prospectus supplement.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved the
issuance of these securities or passed upon the adequacy or
accuracy of this prospectus supplement or the accompanying
prospectus. Any representation to the contrary is a criminal
offense.
PRICE US$5.90 PER ADS
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Per ADS |
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Total |
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Public offering price
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US$ |
5.90000 |
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US$ |
451,350,000 |
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Underwriting discounts and commissions
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US$ |
0.11800 |
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US$ |
9,027,000 |
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Proceeds to us (before expenses)(1)
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US$ |
5.78200 |
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US$ |
442,323,000 |
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(1) |
See “Underwriting” beginning on page S-64 of this
prospectus supplement for a description of the compensation payable
to the underwriters.
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The underwriters have an option to purchase up to
an aggregate of 11,475,000 additional ADSs from us at the public
offering price, less underwriting discounts and commissions, within
30 days of the date of this prospectus supplement.
The underwriters expect to deliver the ADSs against
payment in New York, New York on or about January 19, 2023.
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BofA Securities |
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Goldman Sachs |
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J.P. Morgan |
Prospectus Supplement dated January 17,
2023