Shares of iQiyi Inc. slid below their initial public offering price in the stock market’s debut last Thursday after the company raised $2.25 billion in a U.S. initial public offering.

The Chinese streaming platform, which is majority-owned by Chinese internet search firm Baidu, had opened at $18.20, slightly ahead of the $18 IPO price, but the stock quickly paired gains.

Shares traded down about 1.1 percent to $17.80, giving iQiyi a market valuation of about $12.6 billion.

Shrugging Off

The company’s CEO, Gong Yu, shrugged off any concerns over fluctuations in the stock price.

He said in the interview he isn’t worried about short-term changes in the stock price because the company is aiming to be a major entertainment player in the long term.

"We are not concerned with short-term volatility," Gong said in an interview. "Long term, you'll see how much value the IPO creates."

“The share price right now doesn’t matter -- be it higher or lower than $18 -- when looking from an eight or 10 years horizon," Gong added.

“I met with over 200 investors on the roadshow. Most of them are concerned about the long-term trend in China’s entertainment industry and economy.”

Netflix-style video streaming

IQiyi’s filings showed that 421 million mobile users tuned into the service at least once a month with 126 million logging in at least once a day, making it the most popular Netflix-style video streaming service in China. But users there are fickle thanks to the ease of canceling subscriptions and Tencent Video’s own base was only slightly smaller as of February.

iQiyi is the largest Chinese video streaming service to go public. It’s engaging in an increasingly expensive battle for views against Tencent Video and the Alibaba’s platform Youku Tudou. The money raised will be largely spent on buying and making the content needed to attract more users, and researching new technologies.

Baidu, Alibaba, and Tencent Holdings Ltd. are all attracted to the sector because a video is a highly ‘sticky’ service that attracts users to their platforms. This means they can be served more advertising or converted into customers of other products.

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