Top Forensic Algorithms Check Published Fraud Allegations Against iQIYI

Apr. 09, 2020 3:59 PM ETiQIYI, Inc. (IQ)40 Comments


  • Wolfpack Research published a 37-page research paper dated April 7, 2020, with claims against iQIYI alleging ongoing fraudulent activities including activity prior to its 2018 IPO.
  • iQIYI has responded in a statement that the Wolfpack research "contains numerous errors, unsubstantiated statements and misleading conclusions and interpretations regarding information" about IQ.
  • In this article, I examined the scores from five top forensic and value algorithms that independently check for earnings manipulation, financial irregularities, and bankruptcy risks.
  • The forensic tables of Altman, Beneish, Ohlson, and Montier are displayed below along with value/growth algorithm of Piotroski.
  • In the period examined from 2016 to early 2020, several initial indicators for financial irregularities emerged across multiple models that warrant detailed investigation.
  • This idea was discussed in more depth with members of my private investing community, Value & Momentum Breakouts. Get started today »

Do Forensic Algorithms Detect Any iQIYI Financial Fraud?

In my ongoing look at major fraud and whistleblower accusations, I took a brief look at these claims against iQIYI (NASDAQ:IQ) to see what if any irregularities were revealed by the top forensic algorithms commonly used by certified fraud examiners. As a certified fraud examiner (CFE) and certified anti-money laundering specialist (CAMS) I routinely check accusations against firms and publish findings using these peer-reviewed algorithmic models.

Most recently, I have examined whistleblower claims against Infosys (INFY):

Top Forensic Algorithms Check Whistleblowers' Allegations Against Infosys

These findings also were published globally following an interview with a journalist from India. Auditors later concluded there were no acts of fraud by Infosys which further validated the findings from the multiple forensic algorithms applied in the analysis.

Similar checks using multiple forensic algorithms were applied to whistleblower claims against Disney (DIS), General Electric (GE) and others. None of these checks found any serious irregularities or long-lasting warning signals.

Top Forensic Algorithms Check Whistleblower's $6B Claims Against Disney

Running Top Forensic Algorithms On 2012-2019 GE Financials

These models are not foolproof and are only designed to flag certain financial conditions where examiners could look deeper to better assess underlying financials of a company.

The iQIYI Stock Chart from 2018 to 2020

Assessing the Wolfpack fraud claims against iQIYI

On April 7, 2020, the Wolfpack Research team published a 37-page paper alleging numerous fraud claims against iQIYI, Inc. These claims allege fraudulent activity both before the 2018 IPO of the company as well as allegations of ongoing fraud. The report from Wolfpack can be found in the following link:

IQIYI: The Netflix Of China? Good Luckin.

Elements of the claims against IQ make these specific allegations that can be evaluated in the forensic models:

  • "We estimate IQ inflated

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This article was written by

JD Henning profile picture
Revealing the best financial models targeting double digit success

Welcome! I am a Finance PhD, MBA, investment adviser, fraud examiner and certified anti-money laundering specialist with more than 30 years trading and investing stocks and other securities. I'm the founder of Value & Momentum Breakouts.


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