In the face of muddy water shorting, baidu may need to conduct a second due diligence on YY's domestic live broadcasting business as soon as possible. Although it is hard to say whether the merger and acquisition agreement can be suspended, it is necessary for Baidu to grasp the real data information at least, which is the necessary means for Baidu to cope with such challenges now and in the future. < / P > < p > on November 18, muddy waters research, a well-known short seller, publicly said on social media that 90% of the income of YY's live broadcast business was fake, while 80% of the income of the overseas version of YY, bigo live, was fake. After the short report was released, YY's share price fell 23.37% and its market value evaporated by $1.8 billion (about 11.8 billion yuan). < p > < p > according to the report, muddy water suspects YY to be fake in three aspects. For one thing, 50% of the virtual gifts that question the reunion come from the company's own servers, and another 40% come from external robots or the host's own "inner loop.". Second, because of the fake virtual gifts, the income of the head anchor is not as high as the outside world imagined. Third, the guild that questioned the management of the anchor also participated in the fraud. According to the comparison between YY's financial report and the corporate credit report of the five major associations, muddy water questioned that the income of these associations in 2018 was less than 15% of YY's published revenue. < / P > < p > according to the habitual mode of muddy water, there was a field survey of YY's local office. The net income data obtained from the responsible population was seriously inconsistent with the external evaluation. The analysis and comparison of YY's financial report and the credit reporting report of the association and enterprises, as well as the real-time observation of the online celebrity live program, can be described as complete in form and content. < p > < p > on November 19, huanju group, in response to the muddy water short report, said that the muddy water report was full of ignorance of the live broadcasting industry and the live broadcast ecology, and the report contained a large number of errors due to its unclear logic, data confusion and generalization. < / P > < p > and this event happened just when Baidu was about to "marry" YY's domestic live broadcasting business. Could this "marriage" worth 23.7 billion encounter variables? Can we still cook a mature meal? < / P > < p > if the report data analysis and conclusion of muddy water are tenable, YY's business and revenue are seriously "mixed". What Baidu values is just YY's share of core resources such as anchors and users, as well as its outstanding liquidity. The reason why baidu is willing to invest a lot of money to acquire YY's domestic live broadcasting business is to put its high-quality anchor resources and high paid users into its pocket, and graft it with its own traffic, so as to open up the channel of traffic realization. < / P > < p > live and short video are becoming an important track for Baidu. Baidu hopes to obtain more new business besides search and information flow. However, the competition in live and short video market is fierce. If we can harvest domestic live broadcasting team, technology and related resources with mature YY business form and strong revenue cashing ability, it will be beneficial for Baidu to gain a large market share in the above fields To enhance our competitiveness. However, all these are based on the premise that YY presents real and effective business data. Otherwise, what Baidu has bought is a business shell, which will not only make the investment of tens of billions of dollars in vain, but also make the merger plan and development deduction based on the above business model impossible, thus delaying the development opportunity. For Baidu, which is a listed company, its decision-making mistakes and net financial losses will have a serious impact on its performance, stock price and even investors' trust. < / P > < p > due to major investment mistakes, listed companies have a chain reaction on their own business development, financial status and corporate reputation. Once all the accusations of muddy water shorting YY are true, Baidu will also have to bear the doubts of the investment market on its ability of due diligence and risk control, as well as the legal liability, economic loss, public opinion pressure and bad debt provision of the third party due to the loss of shareholders' equity brought about by the investment. Investors will even question that the directors, supervisors and senior executives fail to strictly perform their established regulations in the process of investment and acquisition Foreign investment review, due diligence procedures, or failure to perform due diligence and reasonable duty of care. It can be seen from this that the seemingly win-win "marriage" between Baidu and YY has suddenly been shorted by muddy waters, and the risks and variables brought about by it have also increased sharply. In the Baidu 2020 third quarter earnings call conference not long ago, Baidu CEO Robin Li responded that Baidu had 300 million days of live users, and the acquisition of YY was very natural for cash flow. YY as a large live platform, has accumulated rich experience, baidu live has a lot to learn from and learn from. YY's team is also very happy to be able to obtain the traffic provided by Baidu. < / P > < p > in the face of short selling in muddy waters, baidu may need to conduct a second due diligence on YY's domestic live broadcasting business as soon as possible. Although it is hard to say whether the merger and acquisition agreement can be suspended, it is necessary for Baidu to grasp the real data information at least, which is the necessary means for Baidu to cope with such challenges now and in the future. < p > < p > > Yuanshan (Financial commentator) < / P > < p > 0