|Bid||15.96 x 1100|
|Ask||15.99 x 4000|
|Day's Range||16.05 - 16.43|
|52 Week Range||14.35 - 29.18|
|Beta (3Y Monthly)||N/A|
|PE Ratio (TTM)||15.18|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||20.16|
Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The last 12 months is one of those periods, as the Russell 2000 […]
BEIJING , Oct. 18, 2019 /PRNewswire/ -- The mobile application of iQIYI -- iQIYI, Inc. (NASDAQ: IQ) ("iQIYI" or the "App"), a market-leading online entertainment service in China , ...
SHANGHAI, Oct. 18, 2019 /PRNewswire/ -- iQIYI, Inc. (IQ) ("iQIYI" or the "Company"), an innovative market-leading online entertainment service in China, held its annual iJOY Conference (the "Conference") in Shanghai on October 15th. Under the theme of "New Trends New Growth", the Conference served as a platform for iQIYI to announce its content and marketing strategy for 2020 and discuss the future prospects of China's entertainment industry with brand advertisers and iQIYI partners.
Most investors would love to have the next Netflix (NASDAQ:NFLX) in their portfolio. But make no mistake, buying iQiyi (NASDAQ:IQ) stock is not the way to enjoy that kind of storied investment.Source: Faizal Ramli / Shutterstock.com Over the last decade -- and despite a more drawn out correction over the past year -- shares of NFLX stock have returned more than 5,000% to its long-term investors. At its best, a gain in excess of 10,000% was staring some shareholders squarely in the face. I wish I had that foresight while browsing the aisles of Blockbuster. But I'm here to plea investors to let bygones be bygones. Don't think buying IQ stock simply because it's hailed as China's Netflix is going to fix anything.To be certain, some investors will argue that while iQiyi has been likened to Netflix, its business model also includes platforms similar to Alphabet's (NASDAQ:GOOG, NASDAQ:GOOGL) YouTube and privately held Twitch. And I get it, that pitch sounds even more compelling. But more importantly, IQ stock faces an uphill battle off and on the price chart.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Chinese Stocks and a Rough 2019The past year of course hasn't just been painful for IQ stock. More than a few Chinese stocks like Alibaba (NYSE:BABA) and Tencent (OTCMKTS:TCEHY) can blame the trade war with the United States as being in large part responsible for their underperformance since 2018. But iQiyi has much deeper issues. * 10 Super Boring Stocks to Buy With Super Safe Returns As original content costs skyrocket, the increasingly expensive streaming market will continue to become more challenging for iQiyi stock. It's a trend which shouldn't be dismissed. And with the company nowhere close to turning a profit -- and going through cash like water trying to make a name for itself -- that point is all the more important. And by the way, Alibaba and Tencent? Those two tech titans also happen to be very well-capitalized threats to IQ's success.Sure, bulls could try to look at IQ's impressive subscriber data and believe with roughly 93% of China's 1.4 billion population still untapped, that there's only upside for iQiyi stock price. But as InvestorPlace's Josh Enomoto eloquently discusses, it's simply not that easy.Then there's IQ stock's price chart. From a quick glance, it's easy enough to hope for a bullish resolution. But again, if the story looks to good to be true, watch out below. IQ Stock Weekly ChartIt's not fun being the bearer of bad news, but I take the responsibility seriously. It would be very easy to be bullishly appreciative of a potential triple bottom taking shape on the weekly price chart with iQiyi stock. With last week's hammer candlestick, a rally above $16.94 would confirm the pattern. You'll get no argument there. It is what it is.Still, a break of technical support could get even uglier for IQ stock as new lows are made. And this isn't only because iQiyi's stochastics are failing to hint at a bottom or that broken patterns can be powerful motivators -- especially large ones like IQ's.IQ stock, plain and simple, is highly speculative. And where the rubber meets the road, bottoming formations of this type should be reserved for stocks which have the backing of stronger fundamentals that support longevity or aren't already showing signs of stagnating growth. Again, thanks Josh.Investment accounts under Christopher Tyler's management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler's observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. . For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Super Boring Stocks to Buy With Super Safe Returns * 10 Winning Stocks to Buy and Stick With for the Long Haul * Don't Give Up on These 4 Cannabis Stocks The post iQiyi Stock Is Really Not the Next Netflix appeared first on InvestorPlace.
Shares of Chinese online video platform iQiyi Inc (NASDAQ: IQ) dropped another 3% on Tuesday and are now down 38.4% overall in the past year as the trade war between the U.S. and China appears to be ramping up once again. On Tuesday morning, Benzinga Pro subscribers received an option alert related to an unusually large iQiyi trade.
IQIYI, Inc. Sponsored ADR (IQ) closed the most recent trading day at $15.92, moving -1.3% from the previous trading session.
BEIJING, Sept. 27, 2019 -- iQIYI, Inc. (NASDAQ:IQ) ("iQIYI" or the "Company"), an innovative market-leading online entertainment service in China, today announced changes to.
BEIJING, Sept. 27, 2019 /PRNewswire/ -- iQIYI, Inc. (IQ) ("iQIYI" or the "Company"), an innovative market-leading online entertainment service in China, introduced a reply function to its online video "bullet subtitles" feature (the "Feature") in August this year, making iQIYI the first video platform in the industry to have an inter-user communication function to bullet subtitles. Since its launch, the reply function has been welcomed by lots of viewers, boosting the overall popularity of the Feature, as iQIYI saw a 99.8% year-over-year increase in the volume of bullet subtitles on its platform from July to August this year.
BEIJING, Sept. 27, 2019 /PRNewswire/ -- iQIYI, Inc. (IQ) ("iQIYI" or the "Company"), an innovative market-leading online entertainment service in China, announced the start of production for The Journey of Flower 2 (the "Series"), sequel to the highly popular online drama series The Journey of Flower ("the Series' first season") that was released in 2015. Following the success of the Series' first season, iQIYI will once again work with the team at Ciwen Media to bring audiences back to the world of this beloved IP production. "Four years since its premier, The Journey of Flower continues to retain high viewership numbers on the iQIYI platform and has become a token production that allows overseas audiences to appreciate the classical Chinese culture," said Wang Qingfeng, General Manager of iQIYI's Film and Television Strategy Center.
iQiyi (NASDAQ:IQ) may be up nearly 25% on the year, but at $18.53 it's a long way from the $27.70 it hit in February. And miles from last June when IQ stock topped $40. After slipping another 2.42% in trading on Friday, iQiyi stock continues to experience volatility.Source: Jarretera / Shutterstock.com Depending on your perspective, that could make it worth considering -- assuming it's going to rebound after this latest drop -- or you could decide that IQ is in for a rough ride and should be avoided for now.There's a case to be made for both positions.InvestorPlace - Stock Market News, Stock Advice & Trading Tips The Bull Case for IQ StockSometimes referred to as the "Netflix (NASDAQ:NFLX) of China," iQiyi is a video streaming platform, which was spun off in 2018 from China's Baidu (NASDAQ:BIDU). * 7 Worst Stocks in the S&P 500 in 2019 Everyone is excited about video streaming at the moment. In the U.S., Netflix is preparing to defend its market dominance against a flood of new competition, including streaming video services from Disney (NYSE:DIS) and Apple (NASDAQ:AAPL). Billions of dollars are being spent on bidding for popular television shows to add to these services, while billions more are being invested in original content. Chinese consumers are also embracing video streaming, but the market there is in a much earlier stage. Where Netflix stock has taken hits because of slowing subscriber growth -- and an actual loss of subscribers in its increasingly saturated home market in the last quarter -- China is booming.The country has a massive population and plenty of room left for subscriber growth. The market for paid streaming video services in China is on track to triple in size by 2022 from 2018 levels, and by the end of 2018, three of the five largest subscription streaming video services globally were Chinese companies.Netflix still dominates (it closed 2018 with 24% of global streaming video subscribers), but iQiyi wasn't far behind at 15%. While iQiyi doesn't generate anywhere near the same revenue numbers as Netflix (in 2018, China's top three streamers combined for roughly $8 billion in revenue compared to $16 billion for Netflix), the company has been successfully converting users from free, ad-supported viewing to paid subscriptions.Adding to the bull case for IQ stock is the fact that strict regulations have kept American competition out of China. The closest Netflix has come to breaking into the market is to license original content to a Chinese streaming company -- iQiyi. Why There Is Hesitation About iQiyi StockWhile there is certainly a bull case for IQ stock, there are also many factors that are holding it back. Analysts currently have a median 12-month price target of $20.19, suggesting a lack of confidence that IQ is going to be trading anywhere near the levels it hit earlier this year -- let alone the $40 level it topped last summer.Despite its success in signing up subscribers, iQiyi's last quarterly earnings report showed worrying trends. InvestorPlace's Vince Martin points out that revenue slowed dramatically, advertising revenue declined double digits, and IQ's costs to produce and market original material continued to rise.The nature of the video streaming business means that if iQiyi reins in content spending, subscriber growth slows and it risks losing existing customers. At the same time, the trade war with the U.S. is hurting the economic climate in China. That makes consumers less likely to sign up for a subscription service, and makes existing customers resistant to price increases.Adding to the concerns, there have been rumblings that the Chinese government may consider opening up the country's video streaming market to foreign competition.While not insurmountable, these challenges are all weighing on IQ stock. There is no argument that iQiyi has seen considerable success in becoming a dominant player in the Chinese video streaming market, but there are an awful lot of potential obstacles ahead. Any one of these could hurt the company's prospects, making iQiyi stock a risky bet at this point if you're looking for a long-term growth stock.As of this writing, Brad Moon did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Worst Stocks in the S&P 500 in 2019 * 7 Reasons to Own Intuit Stock -- The Unsung Hero of Fintech * Apple and 4 Other Tech Stocks on the Move The post The Pros and Many Cons of iQiyi Stock appeared first on InvestorPlace.
Amid volatility, iQIYI (NASDAQ:IQ) stock has been sideways since November 2018. There are notable fundamental factors that have kept market participants uncertain on the next move for IQ stock.Source: Faizal Ramli / Shutterstock.com I believe that these factors are likely to ensure that IQ remains either sideways or falls lower in the next 12 to 18 months. This article will discuss the factors surrounding iQiyi stock, focusing on the company's cash burn and the impact of competition.Before discussing the bear story, I must mention that new businesses are bound to face cash burn. However, the potential to monetize key assets often determines the target stock's direction. That's the uncertain part for IQ. This implies leveraging or equity dilution, either of which is bound to impact investor sentiment.InvestorPlace - Stock Market News, Stock Advice & Trading Tips The Concern on CompetitionIQ is not the only player in the online entertainment service in China. This is likely to have implications on the company's ability to generate cash. * 7 Triple-'F' Rated Stocks to Leave on the Shelf Tencent Holdings (OTCMKTS:TCEHY), which is listed in the Hong Kong stock exchange, is one of the main competitors. For the first quarter of 2019, Tencent Video subscription was 96.9 million. For Q2 2019, IQ had a total subscriber base of 100.5 million. Therefore, both companies are head-to-head in terms of sub count.However, IQ has an edge considering the fact that the company reported year-over-year subscriber growth of 50%. On the other hand, Tencent Video reported subscriber growth of 30% on a year-over-year basis.According to Tencent's quarterly summary:Tencent Video subscription counts were 96.9 million, up 30% year-on-year, benefitting from joint membership promotions with our strategic partners and our popular self-commissioned Chinese anime series, The Land of Warriors Season 2. However, the growth in our video subscriber base slowed, due to the delay in scheduling of top-tier drama series content.The takeaway is that new content on a regular and timely basis is the key to subscriber growth. However, if subscriber monetization is sluggish, expenses related to new content creation will always outpace revenue growth.This is a big challenge for IQ. The company's subscriber growth has been robust. However, subscriber fee is low and the company's advertising service revenue has declined sharply in the recent quarter.The company blames macroeconomic conditions for revenue decline. What follows is that advertising revenue will remain sluggish since macroeconomic conditions remain challenging. In such a scenario, IQ needs to continue investing in new content creation, which will increase the cash burn. Weak Growth GuidanceI believe that the markets will wait for results in the coming quarters before any decisive move for IQ stock. In the meantime, iQiyi stock is likely to remain sideways to lower.The reason for my view is as follows. For Q2 2019, IQ reported revenue growth of 15% as compared to the year-ago quarter. For Q3 2019, the company has guided for revenue growth in the range of 4% to 10% as compared to Q3 2018. Clearly, revenue growth is decelerating even if subscriber growth remains healthy.Further, the company's cost of revenue (the single largest expense item) increased by 14% for Q2 2019. It remains to be seen if growth in cost of revenue outpaces revenue growth in Q3 2019. That would be a major red flag. Concluding Thoughts on IQ stockIQ has a diversified source of revenue generation that includes membership fees, online advertising and content distribution. While member fee growth was robust in Q2, revenue decline on a year-over-year basis from advertising and content distribution was worrisome. These concerns will weigh on the stock until there is a trend reversal.I have focused on these concerns, but there are positives for IQ stock. The subscriber base growth is robust and iQiyi has a healthy cash buffer. The company can continue to invest in high quality content in the coming years. The only major challenge will be to increase the revenue per subscriber.Among the positives, I must add that the company launched a $300 virtual reality headset in May 2019. The virtual reality market is expected to be worth $53.6 billion by 2025. Similarly, the company's iQiyi Mall is an e-commerce platform that sells consumer products, such as electronics, apparel, accessories, beauty and skin care products. The point here is that IQ is active on the diversification front and that should help in the long term.Overall, near-term concerns persist for IQ stock and that will translate into sideways to marginally lower price trends. However, I do believe that the stock can be kept in the investment radar. Coming quarters can possibly provide a better entry opportunity.As of this writing, Faisal Humayun did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Triple-'F' Rated Stocks to Leave on the Shelf * 10 Excellent Stocks to Watch for 2020 and Beyond * 7 Consumer Stocks to Buy in an Uncertain Market The post IQ Stock Is a Buy Later, Not Now Proposition appeared first on InvestorPlace.
It's tempting to believe that JD.com (NASDAQ:JD) is an attractive stock held down only by trade war worries. After all, JD stock, even with a strong 2019, sits about one-third below 2018 highs. And it looks reasonably cheap from a fundamental standpoint, with a 26 times forward multiple despite analyst expectations for 250% growth in earnings per share between 2018 and 2020.Source: Michael Vi / Shutterstock.com To be sure, I do believe JD stock is somewhat undervalued. I wrote last month after the company's blowout earnings report that the stock should keep rising. JD.com shares have moved higher, though resistance at $32 continues to hold.And JD stock clearly has taken some hits from trade war sentiment. Most notably, the stock fell 19% in eight sessions starting in late July, during which time the U.S. announced new tariffs on China. The distance from 2018 highs, too, might seem trade-related.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut the story isn't quite that simple. That doesn't mean JD.com stock is a sell. Again, I see upside from current levels. But it does mean that a trade war resolution, if and when it comes, might not be the catalyst some bulls hope. The Currency Effect on Chinese StocksThere no doubt is some trade war impact priced into Chinese equities at the moment. For instance, the iShares MSCI China ETF (NASDAQ:MCHI) still is down 23% from January 2018 highs. * 7 CBD Stocks to Buy That Are Still Worth Your Investment Dollars But one notable contributor to that decline has been currency. The Chinese yuan has fallen over 10% against the dollar over that span. That means profits -- and expected profits -- are less valuable in American dollars. And given that Chinese companies, including JD.com, generate nearly all of their revenues domestically, currency alone likely has driven roughly half the decline in Chinese stocks over the past 20 months. JD Stock UnderperformsMeanwhile, JD stock -- perhaps surprisingly -- actually has underperformed that ETF over the same period. JD shares have dropped almost 40%. And there have been some company-specific factors driving the decline. 2018 results were disappointing. JD missed Street estimates for revenue in both the second and third quarters. For the year, non-GAAP net income declined 31% in local currency.To be sure, JD was investing in its business, which created some pressure on margins. And the huge second quarter -- in which margins rebounded -- suggests those investments are paying off.Still, this year, revenue growth has slowed, to under 17% year-over-year in the first half. That's notably slower than larger rival Alibaba (NYSE:BABA). Pinduoduo (NASDAQ:PDD) grew its revenue 169% in the second quarter, albeit off a much smaller base.Again, none of this is to suggest that JD stock is a short or a sell here. At 26x forward earnings, valuation is reasonable in the context of current growth. But there are risks here. A number of key employees have left of late. Margins are exceedingly thin. Any incremental pricing pressure can lead to a repeat of 2018's earnings decline.And some of these issues have been a factor in the underperformance of JD.com stock. This isn't just a trade war problem. Is JD.com the Right Play?Would a trade war resolution help JD stock? Absolutely. But there's certainly a risk that it could be what is known as a "sell the news" event. It's not as if investors have simply dumped the sector: MCHI has gained almost 12% this year and JD.com stock has risen 43%. Some kind of resolution -- at some point -- already is priced in.There's another question as well: Is JD stock necessarily the biggest beneficiary of a trade war resolution? I still think there's an intriguing long-term case for iQiyi (NASDAQ:IQ) despite disappointing earnings. NetEase (NASDAQ:NTES) and Tencent (OTCMKTS:TCEHY) could be interesting as well.Forced to choose, I'd still pick JD. But that choice would be made understanding the risks. Margins are thin, competition is intense and China has economic issues that go beyond tariffs. Those factors will hold with or without a trade war -- and they suggest that JD isn't simply going to soar once a trade accord is reached.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 CBD Stocks to Buy That Are Still Worth Your Investment Dollars * 5 Stocks to Buy With Great Charts * 5 Goldman Sachs Stocks to Buy with Over 20% Upside Potential The post JD.com Stock's Problems Go Beyond the U.S.-China Trade War appeared first on InvestorPlace.
BEIJING , Sept. 17, 2019 /PRNewswire/ -- iQIYI, Inc. (NASDAQ: IQ) ("iQIYI" or the "Company"), an innovative market-leading online entertainment service in China, today announced that ...
The challenges facing Chinese streaming video play iQiyi (NASDAQ:IQ) are myriad, and they've pressured IQ stock.Source: natmac stock / Shutterstock.com iQiyi stock has rallied so far this year, gaining 21%, but it's faded of late. Those gains, meanwhile, are coming after the stock hit an all-time low in late 2018.In recent months, at a cheaper price, I've come around to the bull case for IQ stock. In June, I called it the best play for those still bullish on China long-term.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThat's not to say the risks weren't, and aren't, significant. The Chinese economy continues to struggle amid a trade war with the U.S. Competition is intense, most notably from Tencent (OTCMKTS:TCEHY) and Alibaba (NYSE:BABA) unit Youku Toudo. iQiyi still is burning cash as it grows. Majority owner Baidu (NASDAQ:BIDU) is struggling, leading to the possibility of further sales of iQiyi stock.iQiyi's second-quarter report last month seems to highlight, if not increase, those risks. Investors largely have shrugged off the report, as IQ stock trades above where it did before the release. * 10 Stocks to Sell in Market-Cursed September But on this site, Luke Lango argued the report wasn't enough, and I'm inclined to agree. iQiyi still has an intriguing long-term case, but the near-term risk to IQ stock seems to be rising. Growth Slows, but IQ Stock Holds UpFrom a headline standpoint, iQiyi's second-quarter earnings report looks close to disastrous. Revenue growth decelerated dramatically. In Q1, revenue in yuan increased by 43% year-over-year. Growth in Q2 was just 15%.To be fair, there's a key culprit outside of the company's control: the Chinese macroeconomic environment. Advertising revenue declined 16% year-over-year in the second quarter, after a ~flat performance on the same basis in Q1. CEO Tim Gong Yu noted that "a lot of advertisers constrained their advertising budgets," on the Q2 conference call.In the subscription business, iQiyi generated new members toward the end of the quarter thanks to new content. And so membership revenue increased just 38% despite a 50% increase in the quarter-end subscriber count.Both factors are understandable, and indeed the 15% increase was in line with Street estimates. That said, Q3 guidance for revenue growth of just 4-10% suggests a further decline in the top-line growth rate.At the same time, iQiyi's spending isn't going anywhere. Operating loss widened by over 40% year-over-year. Content costs increased by just 7%, but selling and marketing expenses both rose sharply.Perhaps surprisingly, investors saw the quarter as reasonably in line: iQiyi stock only fell 1% the following day. It may be that 50% subscriber growth and decent performance in a tough environment was good enough, particularly given the fact that IQ stock had slid heading into the release. The Risks to iQiyi StockThat said, there are some concerns in the report upon closer inspection. One, in particular, is the fact that subscriber growth came in toward the end of the quarter. As management noted, that boost came as the content was released, which itself is a bit of a concern.The worry is that iQiyi essentially can't stop spending on content, or else subscriber growth slows or stops. It's an echo of the worry facing Netflix (NASDAQ:NFLX), to which iQiyi is often, and somewhat incorrectly, compared.The bullish case for both stocks is that building out a content library with upfront spending will result in enormous cash flow down the line, as that content is monetized. If, however, consumers come to expect more and better content in perpetuity, the hamster wheel never stops spinning. The correlation between content spend and subscriber growth thus is somewhat discomfiting, even at this early stage in iQiyi's growth.The other concern is on the advertising front. Macro weakness is a headwind, to be sure. But iQiyi management also noted an increase in the supply of online advertising inventory, which is pressuring pricing.That's a big risk. Price reductions come off the operating profit line at almost 100%. And the combination of higher inventory and macro concerns suggests ad revenues can be pressured into 2020 at least. Investors hoping for near-term profitability may have to wait longer than they expected. Dented, but Not BrokenTo be sure, Q2 earnings don't break the case for IQ stock. Investors in U.S. markets seem reasonably content with the idea that Chinese companies may struggle for a few quarters. The long-term opportunity, however, still remains.That's true for iQiyi as well. That said, it's hard not to see near- to mid-term risk rising after the second-quarter report. This still is a company with a market cap of over $13 billion, no profitability, and decelerating growth. That's usually a recipe for disaster.Add in the underlying concerns in both the subscription and advertising businesses, and IQ stock at least seems like a candidate for a decline when broad markets stumble. And if Q3 shows further revenue deceleration and wider losses, it may not take a market sell-off for iQiyi stock to start falling again.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell in Market-Cursed September * 7 of the Worst IPO Stocks in 2019 * 7 Best Stocks That Crushed It This Earnings Season The post Things Look Precarious for IQ Stock Post Q2 Earnings Disappointment appeared first on InvestorPlace.
BEIJING , Sept. 11, 2019 /PRNewswire/ -- On September 6 , iQIYI, Inc. (NASDAQ: IQ) ("iQIYI" or the "Company"), a market-leading online entertainment service in China , and the Academy ...
iQiyi (NASDAQ:IQ) is China's leading streaming service. It's attracting investors because it is delivering viewers. In fact, over the next two years some analysts project iQiyi's user growth will climb 6.7% to 738 million. Average revenue per user is also expected to climb 8.3% to $17.60 per user.Source: Faizal Ramli / Shutterstock.com This number raises the question of practical growth versus numerical growth. However, in the short term, more users should provide a nice tailwind for IQ stock. But I'm not so sure that iQiyi has the right business model for long-term growth. iQiyi is like Netflix if Netflix Were Owned by AlphabetThe most important caveat when discussing iQiyi is that it is a subsidiary of Baidu (NASDAQ:BIDU), China's leading search engine. iQiyi is seen as a key source of revenue for Baidu (which still owns 58% of IQ) as it attempts to halt a steep skid in its own stock price. So whenever you talk about iQiyi making over 70% from advertising revenue you have to remember that it's Baidu that's generating that revenue.InvestorPlace - Stock Market News, Stock Advice & Trading TipsiQiyi on the other hand makes its revenue through sales of its subscription services and content marketing. Proponents of IQ stock will say that iQiyi currently has about one-half of the Chinese market. But even with only half the market, it still has more users than Netflix (NASDAQ:NFLX). Plus, by keeping subscription costs very low (approximately $3 in U.S. terms), it will have no problem capturing more of the Chinese market. Do Chinese Consumers Really Love Ads?There are U.S. companies (e.g. Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Facebook (NASDAQ:FB)) that rely on advertising revenue. But that business model is starting to come under attack. Consumers are more aware than ever that the advertising content they receive comes at the expense of their personal privacy. This conflict is being played out in the stocks as investors wrestle with what companies such as Facebook look like with falling advertising revenue. * 7 Stocks to Buy In a Flat Market I have to believe that iQiyi will be facing the same issues. The theory is that China is the leader in e-commerce so it stands to reason that Chinese consumers will be drawn to advertising like a moth to a flame. However, viewing habits in China don't seem to support this theory. A report by digital brand researcher L2 cited that the streaming habits of Chinese consumers revolve around live-streaming events that resemble the QVC network. One of the reasons why Chinese consumers are attracted to this format is because there is no hard sell. It's part infomercial, part reality TV and keeps them more engaged.This isn't to say that iQiyi doesn't have a large user base, but it does suggest that Chinese consumers are not going to pay more for content that includes advertising. They go elsewhere for that. iQiyi Can't Afford to Be NetflixNetflix subscribers pay between $10-$16 for a subscription. With that subscription, they get exactly what they want - - the potential for hours upon hours of uninterrupted viewing. But even though Netflix, which started out as a home delivery service for DVDs, has evolved its business model to incorporate original content, it is still facing two emerging threats. First, original content costs a lot to produce. Second, the two most popular shows on Netflix, "The Office" and "Friends," will no longer be available on the service after 2020.IQ by contrast can afford to keep the price of their subscription low because of Baidu. However, perhaps recognizing the need to give Chinese consumers more variety, iQiyi is still taking on the expense of producing original content. This creates a math problem.Netflix is struggling to remain profitable while charging between three and five times what iQiyi charges their customers. So where is the profit going to come from for iQiyi? Advertising will only take it so far. Eventually, no many how many viewers they deliver, advertisers will expect a return on their investment. But Chinese viewers are already skeptical of traditional advertising, so I'm not sure how that model works long term. The Bottom Line for IQ StockIt wouldn't surprise me if IQ stock rises in the short term as the company expands its user base. However, as much as IQ wants to position itself as the Chinese version of Netflix, investors will need to see a profit and consumers may want to see commercial-free viewing.That presents iQiyi with a trap that I just can't square with long-term success.As of this writing, Chris Markoch did not hold any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 3 Artificial Intelligence Stocks to Buy * 7 Industrial Stocks to Buy for a Strong U.S. Economy * 3 Beaten-Down Bank Stocks to Buy and Hold for the Long Term The post The Numbers Don't Add Up for IQiyi Stock appeared first on InvestorPlace.
Spoiler alert: IQiyi (NASDAQ:IQ) stock has a sustainable rally brewing and the bulls are close to triggering it.Source: Jarretera / Shutterstock.com Wall Street referred to IQ stock in its early days as the Netflix (NASDAQ:NFLX) of China. This was a badge of honor because it meant that IQiyi was in the right business. All content producers have now completely committed to switching their dissemination methods to direct delivery on devices.Netflix proved that the world wants to consume content online. This started the cord-cutting movement and everyone else is in hot pursuit -- but they are still playing catch up to NFLX. Big names like Disney (NYSE:DIS) are at its heels, about to release a new streaming service.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut whenever there is a major shift in a company's methods, there are new opportunities. This allows companies like IQ to carve out their niches in the field. IQiyi provides Netflix-like services in China, and that is a great market to serve because it is massive. So IQ stock's potential is undeniable. The company also has a social media aspect to it where fans can engage with each other about the content.IQ stock came out of the gate like a rocket. Wall Street was smitten with a slew of Chinese IPOs so IQ tripled quickly. But just like many new fad tickers, its sheen faded and the stock corrected hard. IQiyi gave back its entire rally and is now trading inside its initial IPO range. How to Trade IQiyi StockNow that the media frenzy has ebbed, the real opportunities are emerging. In the beginning investors were agog with the concept of Chinese IPOs, but now each company has to trade each on its own merit. * The 8 Worst Stocks to Buy Before the Trade Turmoil Cools Off IQ stock so far appears to be on a decent path, so this is a time for a trade opportunity that could also double as an investment. Usually I require trades to have a tight stop to avoid large losses. But in this case I could make an exception and extend the time commitment.Technically, if IQ stock bulls can beat $19 per share, then they have the opportunity to start a sustainable $3 rally from there. However it is important for them to stay above $17 per share, or they risk retesting recent lows.On the weekly chart, this opportunity is clearest. The price action shows that the range is tight, so with a little help from the general markets, this rally can be a big home run for IQ stock investors.This is not a cheap stock. But for now -- and since the whole industry is still young -- I still consider IQiyi to be a growth company. So for that reason I continue to give it a pass on its profitability metrics. I judge its sales and put less emphasis on its earnings.Moreover, IQ stock sells at only 3.7 times sales which is almost the same as Amazon (NASDAQ:AMZN), and half as expensive as Netflix stock, so it is not outrageously bloated. This is not to say that IQ is cheap. But it is to say that it is miles cheaper than the ridiculous valuations found in cannabis or fake meat stocks. The Bottom Line on IQ StockOfficially, this more of a trading opportunity than an investment thesis for IQ stock. This is especially true because the S&P 500 is within only two percentage points of all-time high. This by definition leaves a lot of froth to come out of the stock market in, general let alone IQiyi stock.Mathematically the upside potential is greater than the downside risk, but success is not a guarantee. There is plenty of room to shed in case of a market-wide correction, even in IQ stock at these low levels.This is a risky trade inside a conservative portfolio. And there are important stock levels to watch that would be short-term triggers. Iqiyi stock is bound by $18.50 above and $17 per share below. A breach of either side would carry momentum in that direction.Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room for free here. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 3 Artificial Intelligence Stocks to Buy * 7 Industrial Stocks to Buy for a Strong U.S. Economy * 3 Beaten-Down Bank Stocks to Buy and Hold for the Long Term The post IQiyi Stock Is Poised to Rally Above $18 appeared first on InvestorPlace.
The premise of iQiyi (NASDAQ:IQ) was lauded in the middle of last year, shortly before and then after the company went public. Though IQ stock stumbled immediately out of the gate, last year's rally from a low near $16 to a peak of above $46 sent a clear message. That is, the so-called Netflix (NASDAQ:NFLX) of China was positioned to sustain its incredible pre-IPO growth pace.Source: Jarretera / Shutterstock.com Everything that could have gone wrong for iQiyi stock did go wrong in the meantime. Shares are presently priced at less than $14 and are lingering fewer than four points from record lows seen at the end of last year.Yes, the impact of newly-imposed tariffs and the ensuing economic headwind played a major part in that pullback.InvestorPlace - Stock Market News, Stock Advice & Trading TipsTake a closer look though. While the economic backdrop has remained uncertain and best and concerning at worst, iQiyi is surviving. In fact, it's thriving. The biggest challenge facing IQ stock is inspiring investors to take notice. A Closer Look at iQiyiIt's often called the Netflix of China, although that's not the best comparison. It's actually more akin to Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) property YouTube, in that it allows users to upload their own video content in addition to the digital content curated by iQiyi. The comparison is particularly more appropriate now that YouTube offers subscription-based access to traditional cable programming and originals. * 7 Deeply Discounted Energy Stocks to Buy Regardless of the most relevant comparison though, two facets about the company have remained largely overlooked during the past few turbulent months. One of them is, there's nothing else in China quite like it. The other is, Chinese consumers increasingly love their iQiyi service.Numbers tell the tale, for investors that care about such details.Take last quarter's headcount for example. As of the end of its second fiscal quarter, the company boasted a little over 99 million paying members, a figure that was up 50% year-over-year. To that end, revenue improved 15% year-over-year, reaching $1.0 billion.It's still bleeding money, which perhaps is the biggest mental hurdle for would-be IQ stock owners. Losses continue to swell too, reaching $339.0 million in the second quarter. Selling and administrative expenses and R&D spending made up a huge amount of its spending growth that led to widening losses.If the pros are right though, this young company is already at the profit turning point. From here, spending should stabilize, but revenue should continue to grow. Click to Enlarge The Near Future and IQ StockThat's a tremendously big "if," of course. iQiyi is still a startup, and doesn't enjoy the deep pockets rival players like Youku-Tudou and Tencent Video have. Tencent Video is a project owned and operated by Tencent (OTCMKTS:TCEHY), while Youku is a subsidiary of eCommerce giant Alibaba (NYSE:BABA).By many measures, however, iQiyi may be better served by operating independently of China's more established digital technology companies.Not unlike Netflix in its infancy, iQiyi doesn't have any other companies standing over its shoulder and scrutinizing every decision it makes. That allows it to lay the proper foundation first, setting the stage for the same kind of market dominance Netflix enjoys in the western hemisphere now. Profits aren't quite the point just yet.IQ stock is also China's only real pure play on the streaming video market, which is something focused investors like. The Bottom Line on IQ StockThe projected fiscal trajectory hasn't changed much since iQiyi's IPO. The only thing that's changed is the market's perception of IQ stock, and even then, the change has been modest. The bulk of the suppressive effort holding iQiyi stock is fear of how investors will view it should China slip into a recession.Even so, it appears investors are slowly but surely warming up to the reality that such a headwind doesn't necessarily have to be damning for iQiyi's growth. In the same vein that low-cost entertainment like that provided by Netflix is seen as even more valuable when times are tough, iQiyi's service is an affordable alternative to pricier entertainment options there.On the flip side, should the trade summit between President Trump and China's President Xi Jinping now scheduled for October lead to a long overdue breakthrough, the subsequent economic recovery could make iQiyi an easily affordable tack-on for its consumers.There's just not a lot of downside with IQ stock, relative to its upside.The trick will continue to be getting others to embrace the idea that entertainment subscriptions are the new norm in China, just like they are elsewhere.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Deeply Discounted Energy Stocks to Buy * 7 Stocks to Buy In a Flat Market * 10 Stocks to Buy to Ride China's Emerging Wealth The post IQ Stock Is a Good, If Underestimated, All-Weather Holding appeared first on InvestorPlace.