You may recall that we were the first AV publication to report the purchase of VIZIO by a Chinese company called LeEco. LeEco is a giant (multi-billion dollar) private holding company started by Chinese billionaire Jia Yueting, the founder of Le.com (aka LeTV). Well known in China, LeEco holdings include a cell phone company, a music company, a motion picture studio and a sports TV channel. In addition, they have an Amazon-like on-line company called LeMall and sell everything from electronics to bikes and even cars. In fact, the company co-financed and co-produced the forthcoming movie The Great Wall with US studio Legendary Entertainment.
Jia Yueting wanted to make a big splash here in the U.S. and take major market share, quickly, so he did it by buying the most profitable TV manufacturing company in the world, VIZIO. It was a $2 Billion deal and closed a few weeks ago.
However, suddenly this week, the share price on the Chinese Stock Exchange slid nearly 10 percent and the stock stopped trading Wednesday. This is a big deal as the stock price has declined over 50 percent since the VIZIO deal and the Wall Street Journal reported today, that LeEco is having a major cash crisis.
Apparently this wasn’t totally unexpected as, last month, Jia Yueting wrote a letter to the company saying it was growing too fast and it’s growth had created a cash flow problem. But, to lose 50 percent of your stock value in one year is a tough one to recover from.
So, this could weigh heavily on VIZIO.
Just thought you should know.