Jia "YT" Yueting, chief executive officer of LeEco Global Group, poses at the company's headquarters in San Jose, California. (Photo : Getty Images)
According to the Wall Street Journal, LeEco Holdings is planning to change their business model following a slide in share price that forced the company to stop stock market trading.
Jia Yueting, the billionaire founder of LeEco, warned that they are running low on cash, which may impact their operations.
The company says that their ventures overseas to sell products, ranging from TVs to smartphones and electric cars, so they can compete globally, is the primary reason for their cash crunch.
LeEco announced a deal to buy Vizio Inc, a U.S. TV maker, for $2 billion last November.
Leshi Internet Information & Technology Corp., a Shenzhen-listed firm, stated that they have halted trading on Wednesday before the market opened. Leshi’s stock plunged by 9 percent on Tuesday and closed at 35.80 yuan. This is worse compared to the 80-yuan closing in their stocks in May 2015.
Jia announced last month that the company had over-expanded and was having issues acquiring fresh funds. A spokeswoman for LeEco declined to comment on upcoming business changes and stock reports on the Chinese media.
Leshi said: “To protect the interests of the company and of the many investors, the company needs to halt trade and investigate these matters. At the same time, the company is in the process of planning major matters, which are expected to involve integration of industry resources. There is still uncertainty around this matter.”
Jia has raced to plug LeEco into various high-tech sectors for the past few years, as he believed that building an ecosystem of interconnected smart products will bring him success.He started out with a streaming website similar to YouTube videos, then his business went in different directions.
Jia told his employees: “As we sped ahead blindfolded, and expanded our business by burning cash, we got overstretched in our global strategy.”
LeEco already acquired $600 million in fresh funds from Chinese investors and they are continuing to tap into Hong Kong investment banks.
Leshi said in its filing that it will continue trading after the investigation of the stock-price decline and making some strategic decisions.
