|Bid||17.09 x 1200|
|Ask||17.24 x 800|
|Day's Range||16.74 - 17.31|
|52 Week Range||14.35 - 32.46|
|Beta (3Y Monthly)||N/A|
|PE Ratio (TTM)||16.11|
|Earnings Date||Aug 19, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||22.00|
It doesn't take a genius to point out iQiyi (NASDAQ:IQ) has been in a bearish trend. But looking forward and with earnings on tap, both off and on the price chart IQ stock's pain looks far from over. Let me explain.Source: Shutterstock iQiyi has been hailed as the Netflix (NASDAQ:NFLX) of China. But IQ stock actually operates a lot more like an amalgam of Netflix, Alphabet's (NASDAQ:GOOG, NASDAQ:GOOGL) YouTube and Amazon's (NASDAQ:AMZN) Twitch. It sounds interesting, but the IQ story faces an uphill battle which it's unlikely to conquer.Off the chart, IQ stock has delivered large and indefensible losses which aren't going away anytime soon. The trend of producing original but very costly content has only continued to increase. In fact it absorbed a staggering 79% of iQiyi's revenue in Q1 and up 38% from the prior year.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBottom line, competing in today's streaming video market is a serious threat in IQ stock's ability to reach profitability -- unless IQ stock miraculously produces a great deal more revenue growth than the company has so far. But don't hold your breath.With China's economy continuing to weaken and ad revenues from the company's YouTube inspired business shrinking, the reality of profitability for IQ stock is even further out of reach. And as InvestorPlace's Mark Hake points out, with a massive annual cash burn rate of 53%, iQiyi's difficulties are even more pronounced. * 10 Cheap Dividend Stocks to Load Up On And it only gets worse for IQ stock. The company has a couple of other big problems. iQiyi is being challenged by much larger, profitable and well-capitalized Chinese tech giants Alibaba (NYSE:BABA) and Tencent (OTCMKTS:TCEHY). Not only do these companies have the wherewithal to absorb losses to gain market-share, they're in position to stay the course, even if today's slower growth environment becomes a full-blown recession.Lastly, there's also IQ's price chart. It's our technical view iQiyi shares aren't in position to win over any fans, except perhaps bearish traders comfortable with shorting stock. IQ Stock Daily Chart Following a very brief respite which saw shares surge higher and unsuccessfully challenge the 200-day simple moving average earlier this summer, it has been all downhill for IQ stock investors. And right now, shares of IQ are setting up in a bearish pattern pointing at even lower prices.Specifically, IQ stock has formed a flag under price support which preceded the jump in share price and beneath the 76% retracement level. That's not good news for bulls. Moreover, with stochastics curling into a bearish crossover inside neutral territory, iQiyi is in position for shorting. Trading IQ Stock Gaining short exposure in IQ stock before the company reports next Monday looks approachable. But the possibility of increased earnings volatility, which can work against the position, needs to be respected. As much, and for those seeking a bearish position in front of the iQIYI report, I wouldn't recommend shorting shares outright. But that doesn't mean you can't trade IQ stock.Instead, I'd suggest using a slightly out-of-the-money bear put spread. One favored vertical of this type is the weeklys Sep 27 $16/$14 put spread for 50 cents. Unlike short stock, a bearish vertical spread can control and reduce risk to the debit paid and offer big-time profits in the event iQIYI stock trades aggressively lower.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 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post iQiyi Stock Will See Lower Prices appeared first on InvestorPlace.
In the latest trading session, iQIYI, Inc. Sponsored ADR (IQ) closed at $16.97, marking a +0.24% move from the previous day.
iQIYI's (IQ) second-quarter 2019 results are expected to benefit from solid content slate, expanding original content portfolio and partnerships.
BEIJING , Aug. 15, 2019 /PRNewswire/ -- iQIYI Sports, a joint venture between iQIYI, Inc. (NASDAQ:IQ) ("iQIYI" or the "Company"), an innovative market-leading online entertainment service ...
Credit has to be given where it's due -- at least the Alibaba Group (NYSE:BABA) bulls are trying. Though down in step with most other stocks since late July, Alibaba stock turned the ship around in early August before a major technical floor was broken. For the second time in less than three months, that recovery effort is unfurling on above-average volume.It remains to be seen if it will take hold. A solid second quarter report from rival JD.com (NASDAQ:JD) certainly helped fan the bullish flames of the current rebound effort. But, it wasn't enough to push BABA stock above a convergence of technical resistance before a newly-inverted yield curve stoked recession fears … again.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 15 Growth Stocks to Buy for the Long Haul Thursday's post-close earnings report from Alibaba Group may well force traders to commit to a decision, for better or worse, on Alibaba stock. BABA Stock Getting SqueezedIt's a misnomer that all of China's top stocks are in a nosedive. Certainly Weibo (NASDAQ:WB), Baidu (NASDAQ:BIDU) and Iqiyi (NASDAQ:IQ) have been fighting losing battles. Baozun (NASDAQ:BZUN), Tencent (OTCMKTS:TCEHY) and Alibaba stock remain in distinct uptrends though, even with sizeable setbacks seen in the middle of 2018.That could all change dramatically after Thursday's closing bell rings, however. That's when Alibaba is slated to reveal last quarter's results into an environment where there's little room left to roam.The chart tells the tale. The rising support line in place since early 2016 is still intact, prompting last week's rebound effort. But, a relatively young falling resistance line is also in place. That's what broke the rally effort in July, and ultimately in May as well. Click to EnlargeThose two lines are clearly on an intercept course, now less than thirty points apart. That's not a lot of room for BABA stock to do what it usually does.It's highly likely that whatever Alibaba reports on Thursday will ultimately snap the psychological underpinnings of either the support or resistance that has taken shape over the past few months. Alibaba Group Facing a HeadwindThe company's first-quarter fiscal results are going to be unveiled in a less than hospitable environment.Although the White House backed off on plans to introduce new tariffs on Chinese imports into the United States this week, older tariffs remain in place. While the U.S. economy is growing at a measurable pace, China's is starting to show serious cracks. The country's industrial output grew at a 17-year low in July. Though it hinted at a recovery in June, retail spending growth fell to 7.6% last month … the second-lowest growth pace in years. The nation's unemployment rate grew from 5.1% in June to 5.3% in July.It remains to be seen to what extent that turbulence will affect Alibaba's results. The quarter in question ended in June, so the first two months of the three-month stretch were reasonably healthy.Conversely, investors are increasingly pricing stocks based on where it seems they are going rather than where they have been. If China's e-commerce giant paints anything less than a rosy forward-picture, nervous investors may assume the worst and respond bearishly to bullish news. Looking Ahead for Alibaba StockAs of the latest look, analysts are calling for earnings of $1.46 per share of BABA stock on revenue of $15.82 billion. That's considerably more than the year-ago figures of $1.16 and $11.66 billion. The bar is set uncomfortably high.On the other hand, Alibaba only failed to top one quarterly estimate for the past three years. Again, a beat may still not be good enough against the present backdrop consisting largely of worry.Whatever's in store, just know that the chart is just as likely to lead the rhetoric as much as it's apt to be shaped by it. But, that's potentially problematic in itself.If a modest breakdown drags Alibaba stock below the aforementioned floor, that selloff will be heavily highlighted by the financial media, which will exacerbate the selling by virtue of inciting more fear. The market-wide tide will also play a role in the stock's direction from here, and clearly investors are increasingly nervous.Perhaps there's a case to be made for being on the sidelines by the time Thursday's closing bell rings, even if it means leaving money on the table. There's likely to be plenty of trade-worthy action outside of the converging wedge shape.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 * 15 Growth Stocks to Buy for the Long Haul * 5 More Cloud Stocks With Plenty of Potential * 5 Clean Energy ETFs to Buy for 2019 The post Earnings Could Solidify or Squelch Alibaba Stock Uptrend appeared first on InvestorPlace.
BEIJING , Aug. 14, 2019 /PRNewswire/ -- The mobile application of iQIYI -- iQIYI, Inc. (NASDAQ:IQ) ("iQIYI" or the "App"), a market-leading online entertainment service in China , has ...
When iQiyi stock (NASDAQ:IQ) went public in March 2018, Karen Chan of Jefferies called IQ "the Netflix of China." Her target was $33. The price of IQ stock today is $17.21. So what went wrong?Source: Shutterstock First, competition has intensified for IQ, 56.7% owned by Baidu (NASDAQ:BIDU). IQ recently crossed over 100 million paying subscribers. Tencent Video, a subsidiary of Tencent Holdings (OTMKTS:TCEHY), is in a two-way race for first in the "red-hot" online Chinese video market, according to the South China Morning Post.Alibaba Group Holding (NYSE:BABA) runs Youku Tudou, which holds third place. These competitors are not public, so IQ stock is the only way to play the Chinese millennials' online video craze.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSecond, IQ's ad revenue, 31% of its total, will stay weak this year, according to management in their Q1 conference call. China's slowing economy is the main culprit.Third, content cost has skyrocketed. It represented 79% of revenue in Q1, up 38% year over year. That leaves no room profits to be made after all other costs. * 7 AI Stocks to Watch With Strong Long-Term Narratives The reason: iQiyi, just like Netflix (NASDAQ:NFLX) produces its own for-pay drama series and variety shows as well as buys outside content. IQ believes that having unique content drives subscription growth. IQ told CNBC in May that it intends to get bigger into making movies.IQ is really a mix between YouTube, Twitch and Netflix. Its app, which offers videos, gaming and online Twitch-like streaming, is ranked eighth in China with over 530 million monthly active users. IQ wants to take advantage of Chinese millennials' movie and gaming craze.To do this, IQ's CFO told CNBC, IQ offers free content supported by ad revenue, along with pay content, especially movies and gaming. IQ calls this model "Netflix Plus." IQ's gaming app revenue was up 143% in Q1 after it recently acquired Skymoons. Is IQ Valued Like Netlfix?NFLX has over 151 million global paid members and its market value is $135.3 billion. IQ has over 100 million subscribers and its market value is $12.5 billion. This is somewhat skewed since subscriptions account for just 51% of IQ's total sales.Therefore NFLX's value is $0.90 per subscriber. IQ should be valued at $46 billion on a like-for-like basis with NFLX (51% x 100 million x $0.90). But IQ's market value is only $12.5 billion. Why Not?IQ went public at $18 in March 2018, giving it an $11.6 billion valuation. IQ had 50.8 million subscribers at that time. IQiyi stock rocketed to $44, giving it $28.4 billion valuation. Now iQiyi is at $17.21, up from a low of $14.35. Its valuation is only $12.5 billion. What happened?In Q1 2019 iQiyi lost $270.3 million on $1 billion in revenue. Q2 earnings come out on Aug. 19. Analysts expect losses of $0.57 per ADR, or over $414 million. For 2019, losses are expected to be $1.87 per share, or $1.359 billion. This will burn 53% of IQ's $2.55 billion in cash and securities.IQiyi does not produce quarterly cash flow statements. Cash flow losses are unknown each quarter. Since content acquisition costs are almost 80% of revenue, the market assumes IQ will not be cash flow positive for at least several years.This is where the comparison with Netflix falters. NFLX made $270 million in its most recent quarter. Even though its free cash flow burn was -$584 million for the quarter, this was only 11.6% of NFLX's $5 billion in cash resources. That compares to 53% annual cash burn at iQiyi.Given IQ's hot competition, weak ad revenue, massive content costs, and huge cash flow losses, iQiyi stock is not going to be valued like NFLX any time soon. Can IQ Stock Recover?Yes, but IQ must convince the market its subscriber growth and ad revenue will become profitable like at Netflix. Otherwise IQ will have to finance losses by raising more debt or equity, and/or selling assets. None of this is good for shareholders.IQ's stock has recovered from its lows, but don't expect it to approach previous highs any time soon. Wait before buying to see how it handles these issues.As of this writing, Mark R. Hake did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Real Estate Investments to Ride Out the Current Storm * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk * 7 Safe Dividend Stocks for Investors to Buy Right Now The post IQiyi Stock Is a Play on China's Millennial Craze appeared first on InvestorPlace.
It's been a rough run for iQiyi (NASDAQ:IQ) as a public company on Wall Street. The Chinese streaming giant (sometimes touted as the Netflix (NASDAQ:NFLX) of China)had a brief honeymoon phase following its March 2018 IPO. IQ stock sailed from the $18 IPO price, to nearly $50 by mid-June 2018.Source: Shutterstock Then, the honeymoon ended. IQ stock dropped to $15 by late 2018 and has been volatile and choppy ever since, ultimately gaining no ground. Investors have remained concerned with regards to China's slowing digital economy and iQiyi's huge losses.Bulls are hoping second-quarter earnings due on Aug. 19 will provide an upward catalyst for iQiyi stock. I'm not convinced. iQiyi has a profit problem. This profit problem is ultimately what has weighed on the stock over the past few months. I don't see the problem getting better anytime soon. As such, I think the recent weakness in iQiyi is here to stay.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Safe Dividend Stocks for Investors to Buy Right Now At some point, IQ stock becomes a good buy given its long term growth potential in the (what should be) huge China streaming market. But, that point is not here, and it's not now.As such, for the foreseeable future, I think it's best to steer away from IQ stock. The stock remains too risky to touch until profit trends show signs of improvement. iQiyi Has A Profit ProblemIn the big picture, iQiyi is not the Netflix of China. Whereas Netflix has figured out a way to produce sizable profits at scale in the global streaming TV market, iQiyi has yet to do the same in the structurally different China streaming TV market.Indeed, China's streaming TV market is so structurally different that it may be impossible for iQiyi to net a profit here, and that means that iQiyi has a big profit problem that may not go away anytime soon.The difference between China and America's streaming markets comes down to one difference: in America, consumers are willing to pay for content; in China, they aren't. It's that simple.Netflix charges about $10 to 15 per month per subscriber. Pretty much every other U.S.-based streaming service charges the same, from Hulu to Disney+ to Amazon Prime Video. iQiyi, meanwhile, charges about $1.50 to $2 per month. That number isn't a factor of lack of scale, either. iQiyi has nearly 100 million subs, and the average revenue per sub has been stuck in neutral for several years. Instead, it's a byproduct of the fact that Chinese consumers simply aren't willing to pay much for streaming TV content.Thus, iQiyi's unit revenue potential is significantly lower than Netflix's unit revenue potential, but unit costs are pretty much the same. That is, even though streaming prices in China are low, the cost to produce content is not. The result? Unit revenues are lower. Unit costs are the same. Thus, the unit economics at iQiyi are significantly worse than the unit economics at Netflix.Netflix isn't that profitable of a company. They run at operating margins narrowly above 10%. Thus, with significantly worse unit economics, the pathway towards profitability for iQiyi lacks visibility. So long as that remains true, IQ stock will remain depressed. Long Term Potential Is There, but Not CompellingChina's massive digital population and huge consumer appetite for streaming content should mean that iQiyi stock has robust long term growth prospects. But, given the aforementioned profitability concerns, those long term growth prospects aren't compelling here and now.Qualitatively, I think that China's streaming market will grow by leaps and bounds over the next several years as China's consumer economy continues to rapidly digitize. I also think that iQiyi will leverage its original content strategy and scale to remain a very relevant player in this market, implying strong subscriber growth over the next few years. Unit revenues should march somewhat higher with scale. Revenue scale should simultaneously drive positive operating leverage, and margins should trend higher.If you reasonably math out all those aforementioned assumptions, iQiyi projects as a company that could do about $13 billion in revenue by 2025, with profits that will hover around $1 billion. Assuming a multiple of 20-times its forward earnings, which is around average for growth stocks, that equates to a 2024 valuation target for the stock of $20 billion. Discounted back by 10% per year implies a 2019 valuation target of about $12.4 billion.Leaving room for 15% error in the projections, that further equates to a 2019 fair valuation range for IQ of about $10 billion to about $14 billion. IQ stock trades in that range today. Thus, there is upside potential from here, but it's not compelling enough given the company's huge profitability risks. Bottom Line on IQ StockAhead of Q2 earnings, IQ stock remains too risky to touch. At its core, this company has a profit problem. Until that profit problem eases, the stock won't stage a meaningful turnaround. I don't see that profit problem turning around anytime soon. As such, I don't see iQiyi stock turning around any time soon, either.Even if it does, it's still probably best to wait for confirmation rather than to rely on speculation. Because of this - even if the numbers are good - the best time to buy iQiyi stock will be after the Q2 print, not before it.As of this writing, Luke Lango was long NFLX. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Real Estate Investments to Ride Out the Current Storm * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk * 7 Safe Dividend Stocks for Investors to Buy Right Now The post Here's Why IQ Stock Remains Way Too Risky to Touch Right Now appeared first on InvestorPlace.
Baidu is set to report second-quarter earnings on Aug. 19. Weaker online ad business and a delay in iQiyi’s launch of some broadcasting content are contributing to lower expectations.
In the latest trading session, iQIYI, Inc. Sponsored ADR (IQ) closed at $16.86, marking a -1.81% move from the previous day.
As we start August, markets face fresh uncertainty as to how the trade wars will develop, what the Federal Reserve may do next and whether the tensions with Iran will keep heating up. Today, I am going to discuss three stocks that investors may consider selling or hedging: Apple (NASDAQ:AAPL), Baidu (NASDAQ:BIDU) and Boeing (NYSE:BA).Stocks tend to behave differently in a falling market than they do in a rising one. The down moves can be rather fast in a declining market, and a momentum stock may become a falling knife. I personally do not like catching falling knives.Investors may consider waiting on the sidelines if they do not currently have any positions open in AAPL, BIDU or BA stock. If they already own shares, they may either consider taking some money off the table, or hedging their positions. If we're talking about hedging strategies, then covered calls or put spreads with Sep 20 expiry could be appropriate since straight put purchases are likely to be expensive due to heightened volatility.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Stocks to Buy on the Trade War Dip With all of that in mind, let's dive a little deeper into each of these stocks. Stocks to Sell: Apple (AAPL)Source: Shutterstock Notable Risks: Profit-taking, trade wars, currency fluctuations and broader tech market weaknessPossible Price Range: $180-$210On July 30, Apple stock reported third-quarter 2019 earnings, beating on both revenue and earnings per share. And AAPL shares initially went up.However, volatility kicked in after the Fed interest rate decision the next day. Then, on Aug. 1, President Donald Trump announced more Chinese tariffs and AAPL stock took a beating. After all, China is Apple's second-most important market. In Q3, $9.15 billion of Apple revenue came from this key region.It'd be fair to say that Apple stock has now become a proxy for the trade wars between the U.S. and China. Almost 20% of Apple's revenues come from China. In 2018 and so far in 2019, sales of iPhones in China have declined. In its Q3 statement, AAPL reported that sales in China were down 4.5% and there's a good possibility that China's economy will slow some more.Furthermore, AAPL relies on Chinese suppliers, and its mobile devices are assembled in China. Thus, Apple would have to react to tariffs either by increasing prices in the U.S. or absorbing the cost of the tariffs. The latter action would definitely have a major negative impact on the price of Apple stock.It is no wonder that whenever trade war headlines hit the wires, Apple stock price gets negatively affected. The further the signing of the trade deal gets pushed out, the greater the adverse effect on Apple's future earnings and AAPL stock could be.If AAPL's sales, margins and revenue all decline in China amid increased competition from local companies including Huawei, and currency headwinds, then the multiple of Apple stock will drop.Year-to-date, AAPL shares are up abut 30%. Not all investors are comfortable with the increased volatility levels in the stock. If you are a shareholder who has been able to ride the impressive rally since early January, then you may want to take some of your profits. Baidu (BIDU)Source: Shutterstock Notable Risks: Trade wars, questions about growth and broader tech market weaknessPossible Price Range: $90-$115Baidu is expected to report earnings on Aug. 19. During the past year, the BIDU stock price is down over 30%. Its 52-week range has been between $97.77 and $234.88. Now, Baidu stock is hovering around $100. Clearly, the bears have taken control of the tape.What is the main reason for the deterioration of Baidu's market cap? Investors fear that the group's growth narrative does not hold up any more.BIDU has two sources of revenue: * Internet advertising business (which is at the core); and * Income from majority ownership in iQiyi (NASDAQ:IQ)Baidu has over 70% of the Chinese online search market share. Until about a year ago, this leadership has meant growing advertising revenues and solid margins.However, that is not the case anymore. Competitors like Alibaba (NYSE:BABA) and Tencent (OTCMKTS:TCEHY) have been pressuring its business model and ad revenues. Many Chinese consumers are using apps that bypass browsers and thus Baidu's search engine. In other words, BIDU stock's desktop search business is being disrupted or even displaced.Wall Street is not sure if management knows how to go after the challenge to Baidu's core business. The company has increased spending to attract more advertisers, which in turn has affected margins.Furthermore, as the Chinese economy slows down, all these companies chase the same advertisers, who have been scaling down ad budgets.The second factor adversely affecting Baidu's top-line growth comes from its ownership of iQiyi, the so-called Netflix (NASDAQ:NFLX) of China. Baidu still owns roughly two-thirds of iQiyi, so IQ's results and its growth are reflected in Baidu's consolidated numbers. And iQiyi stock is not making any money at this point, either. * 10 Cyclical Stocks to Buy (or Sell) Now And when you add the uncertainty around trade wars, it may just not be fashionable to buy BIDU shares in August, yet. Overall, the bull thesis supporting BIDU stock is falling apart. It would be important to analyze the next earnings report to see if Baidu stock has a better investment proposition for long-term investors. Boeing (BA)Source: Shutterstock Notable Risks: Trade wars, questions about 737 Max 8 aircraft and broader market weaknessPossible Price Range: $300-$335As a manufacturer of commercial and defense products, Boeing is one of the most important names in many portfolios. On July 24, it released quarterly earnings of $2.92 per share, beating estimates. This quarterly EPS is lower than the earnings of $3.33 per share a year ago.BA stock has had a difficult year, to say the least. Boeing shares have been falling since early March, when Ethiopian Airlines suffered a fatal accident involving a Boeing 737 Max 8 aircraft. The March 10 crash was, unfortunately, the second deadly incident of the same model plane, one of Boeing's most popular, in less than six months.In addition to the human cost of both tragedies, many of our readers should be familiar with the difficulties that have followed BA stock after the accidents. July 3, management announced a compensation plan for the survivors of the fatal crashes.The Boeing 737 Max 8 is still grounded and the company does not know if or when the plane can be airborne again. Eventually, Boeing will have to foot the bill for the losses incurred by many airlines due to cancelled flights.The ongoing U.S.-China trade war worries have also added to the BA stock price decline. The company has become one of the proxy names for the conflict. Over the past decade, the growth of China's airline industry has created a massive export market for Boeing. In fiscal year 2018 alone, Boeing generated about $13.7 billion in revenue from world's second-largest economy.Boeing, along with its main competitor Airbus (OTCMKTS:EADSY), are the world's two largest commercial aerospace manufacturers. Therefore, long term, I would not bet against Boeing.However, short-term, things could be choppy and somewhat of a mixed bag. A couple of sour trade headlines or some Boeing 737 Max-related news in the next few weeks could drive BA stock further down toward the $300 level.At the time of writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy on the Trade War Dip * The 5 Highest-Rated Dow Stocks Right Now * 4 Cybersecurity Stocks to Buy for Long-Term Gains The post 3 Volatile Stocks to Sell in August appeared first on InvestorPlace.
If you're looking for a stock to buy that will be able to withstand the uncertainty of a U.S., China trade war, Chinese video-streaming company iQiyi (NASDAQ:IQ) is not the one. This is true despite the fact IQ stock now trades below its $18 IPO price from March 2018.Source: Shutterstock In my latest article about IQ stock at the end of June, I stated that if you have the stomach, $15 is the buy zone if you want to own its stock.Since then, IQ has dropped 17%. As I write this, it's trading around $17.17, about 13% away from the $15 buy zone. Another 20% decline in its share price and iQiyi stock will be irresistible to investors. InvestorPlace - Stock Market News, Stock Advice & Trading TipsHere's why. It's Very ShortMy InvestorPlace colleague Josh Enomoto recently reminded IP readers that 21% of iQiyi's float is held short. That's more than $1.2 billion in shorted IQ stock, a number that's even more frightening when you consider that it is a larger dollar amount than iQiyi's top-line sales from Q1 2019.Josh pointed out that many of the shorts are betting against iQiyi because its revenues are thought to have peaked a year ago in Q2 2018. The company announces its second-quarter results on Aug. 19. A better-than-expected result will crush the shorts and a weak quarter will most definitely knock IQ down to below $15. My argument against the shorts is that as long as iQiyi continues to grow its revenue from membership services by more than 60% a quarter, eventually, like Netflix (NASDAQ:NFLX), it will become profitable. * 10 Stocks to Buy on the Trade War Dip "The revenue trajectory is undeniably impressive, and few doubt the analysts' near-term outlook. What's largely being overlooked is the analyst community's expectations that revenue growth will continue to grow while relative spending growth on content slows," stated InvestorPlace feature writer James Brumley July 22. "Though still expected to be in the red, the pros are looking for losses to shrink this year and next, dramatically improving the per-share profit figures for iQiyi stock."While not every business is scalable, Netflix has proven that video streaming is one of those business models that improve with size. I don't see iQiyi being any different. Eventually, it will have enough Chinese subscribers to deliver profits to the bottom line. In the meantime, IQ stock continues to fall because investors see slowing growth in China and assume that the slowdown to 6% will hurt iQiyi. Most countries would beg for 6% GDP growth, but everything is relative, I guess. China is not growing fast enough and that's hurting IQ's story for investors. The Bottom Line on IQ StockMost of my InvestorPlace colleagues are suspicious of iQiyi stock. I won't get into specific reasons why they are, but the rationale is understandable: iQiyi doesn't make money. Any time you buy the stock of a money loser, you're hoping that other investors will focus on the massive growth in sales and give the bottom-line losses a pass. Sometimes it happens … sometimes it doesn't. In the end, I don't think you should own stocks like IQ if you're not an aggressive investor who's used to volatility and understands that scaling a business takes time and money. Profits aside, iQiyi has a nice balance of revenue streams, and even though membership services account for almost 50% of its overall revenue, its other means of generating sales ensures that it keeps growing at a reasonable place. As Brumley stated, iQiyi is doing everything it can to grow, but investors don't seem to be noticing. If it drops another 20%, I'm confident they'll start to take a closer look.At the time of this writing, Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy on the Trade War Dip * The 5 Highest-Rated Dow Stocks Right Now * 4 Cybersecurity Stocks to Buy for Long-Term Gains The post Another 20% Drop and iQiyi Stock Is Finally Worth a Buy appeared first on InvestorPlace.
BEIJING, Aug. 5, 2019 /PRNewswire/ -- iQIYI, Inc. (IQ) ("iQIYI" or the "Company"), an innovative market-leading online entertainment company in China, yesterday hosted a "Scream Night" live music concert (the "Event") in Beijing. The Event was held as part of iQIYI's Summer Young events, a series of summer-themed offline events in which iQIYI members are given the opportunity to interact with celebrities that appear in their online viewing experience. The Event featured performances from a star-studded line-up, such as Jay Chou and the company's first Chinese new-gen culture virtual idol band RiCH BOOM (the "Band"), which is composed of 6 band members with different appearance and personalities.
Wednesday was not a great day for the stock market in general. After the Fed announced its first interest rate cut since 2008, markets slumped, with the Nasdaq Composite dropping 1.2% on the day. Shares of China's video streaming giant, iQiyi (NASDAQ:IQ), performed even worse, closing the day down 1.8% to $18.59. Should investors be worried about IQ stock? IQ to Report Q2 EarningsSource: Shutterstock The primary factor influencing iQiyi stock at the moment is likely speculation over what the company will reveal in its Q2 earnings. IQ announced at the start of the week that it would report its Q2 earnings after the markets close on Aug. 19. * 8 of the Most Shorted Stocks in the Markets Right Now Weighing heavily on investors will be the company's Q1 results, which were reported in May. During that quarter, the number of subscribers to the company's video streaming service increased 58% year-over-year to 96.8 million. Revenue for the quarter rose 43% compared to the prior year, to $1 billion. However, the company's advertising revenue was flat YoY. iQiyi blamed the stagnation on "the challenging macroeconomic environment in China and slower-than-expected recovery of our in-feed advertising."InvestorPlace - Stock Market News, Stock Advice & Trading TipsDespite the subscriber growth, the company reported a net loss of $270.3 million (a more than four-fold increase) and issued Q2 guidance for revenue in the $1 billion to $1.1 billion range, representing an increase of between 12% and 18%. That is significantly weaker revenue growth than the owners of IQ stock are accustomed to seeing. The numbers suggest that the company's advertising revenue may be in trouble.And that has meant trouble for iQiyi stock. IQ dropped 17.5% during the month of May. While IQ stock enjoyed a brief recovery in the final days of June and the beginning of July, it's resumed a downward trajectory. While $18.59 is far from a record low for IQ stock price (it dropped below $15 last December), it's also nowhere near the $40 levels it had reached last June. Why IQ Stock Is in TroubleNetflix (NASDAQ:NFLX) investors have plenty of things to worry about at the moment, but ad revenue is not one of them. The video streaming market leader doesn't offer an ad-supported version of its service; it relies almost entirely on subscription fees.While iQiyi also charges a monthly subscription rate, it is far lower than Netflix's. The cheapest plan offered by Netflix costs $8.99 per month, the most popular plan is $12.99 and the company charges $15.99 for premium 4K service.As InvestorPlace contributor Josh Enomoto points out, Chinese consumers are more resistant to paying for media content. As a result, IQ is not charging its customers an "economically viable rate" for its video streaming service (it charges around $2 per month), Enomoto noted.In 2018, IQ said it had around 850 million monthly active users, but remember, it only had 96.8 million paid subscribers at the end of Q1. In Q1, subscriber revenue totaled $513.4 million, and the second largest source of revenue was advertising at $315.8 million.Like Netflix, the company is continuing to develop original content, including an expansion into movie development. IQ has also invested in sports broadcasting over its platform, buying rights to soccer's 2014 World Cup and most recently signing a 10-year partnership with the WTA (Women's Tennis Association). Content is expensive and if paid subscriber fees don't cover it, then eventually, something has to make up the shortfall.If IQ is unable to raise its subscription rates to sustainable levels, then advertising -- in the form of short commercials played before its free content -- is expected to help make up the difference. And if that ad revenue is flat, even as subscriptions rise (the company is essentially losing money on every new subscriber), then IQ stock has a problem.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 * 8 of the Most Shorted Stocks in the Markets Right Now * 7 Charts That Should Concern Marijuana Stock Investors * 8 Monthly Dividend Stocks to Buy for Consistent Income The post Why iQiyi Stock Could Be in Trouble appeared first on InvestorPlace.
It's not an immediately intuitive course of action; however, despite the robust trading in the broader markets, investors may want to analyze the most shorted stocks. After all, the recent record-breaking moves in the major indices practically endorse contrarian strategies.Source: Shutterstock You can make a strong case that Wall Street has gotten well ahead of itself. Currently, we're riding the longest bull market in history. But even those who have no interest in the finer details of investing can tell you the obvious truth: sentiment moves in cycles. Therefore, this rally will cool at some point, and that's no bull.For most folks who aren't nearing retirement, the best move is to ride out the coming storm. Over the long run, staying in the markets and not panicking has produced robust gains.InvestorPlace - Stock Market News, Stock Advice & Trading TipsYet some people aren't built to sit and wait. In this case, short selling provides a channel to profit from the bearishness. And to help mitigate the inherent and dangerous risks involved in this activity, you may consider the names that have attracted substantial pessimism. * 10 Monster Growth Stocks to Buy for 2019 and Beyond With that, here's a deeper look at some of the most shorted stocks in the markets right now: Tesla (TSLA)Source: Mike Lau via Flickr (Modified)Tesla (NASDAQ:TSLA) is a situation that mixes the most shorted stocks with one of the most celebrated. Led by one of the greatest minds of our generation in Elon Musk, TSLA stock skyrocketed a few years ago. But recently, Wall Street has asked tough questions regarding the viability of the company's electric vehicle business.At the most recent count, 35% of the float in TSLA stock is held short. Among the big names in the market, only one company features a higher short float. Further, the dollar volume of this short selling amounts to $9.44 billion. In this category, Tesla takes home the dubious top spot.So why do folks hate TSLA stock so much? Although the underlying company's EV technology impresses, Wall Street is in the numbers business. According to their latest second quarter of 2019 earnings report, Tesla missed on both the top and bottom line.But in my opinion, TSLA stock faces pressure from short selling because the overall infrastructure doesn't support EVs. Instead, we're in the golden age of fossil-fueled cars. Thus, I see shares as a viable nearer-term candidate for a negative play. Don't be surprised if TSLA falls below $200. Under Armour (UA, UAA)Source: Hillel Steinberg via Flickr (Modified)Another publicly traded company in a frustrating dichotomy is Under Armour (NYSE:UA, NYSE:UAA). On the consumer level, Under Armour appeals to a broad base thanks to its stylish athletic apparel. However, that doesn't necessarily translate to higher prices for UA stock. In fact, the equity is one of the most shorted stocks.As of mid-July, a little over 21% of the float for UAA stock was held short. Additionally, the dollar amount of the short selling comes out to $1.07 billion.Since hitting rock bottom near the end of 2017, UA stock has trended very positively. Last year, the sports-apparel maker returned 21% to beleaguered stakeholders. And in the first half of this year, UAA stock gained over 45%. * 7 A-Rated Stocks Under $10 But if you're one of the lucky souls to have profited from the resurgence, it's time to secure those gains. From the latest read, sales in the critical North American market have weakened more than analysts expected. Plus, sports sponsorships are ridiculously expensive and will threaten Under Armour's earnings picture for years to come. iQiyi (IQ)Source: Shutterstock On the surface, streaming giant iQiyi (NASDAQ:IQ) should decisively outperform the broader markets. After all, this is China's Netflix (NASDAQ:NFLX). But after an extremely strong start to the year, IQ stock finds itself in an ugly bearish trend channel. Subsequently, iQiyi is also one of the most shorted stocks of 2019.From the latest data, just under 21% of the float in IQ stock is held short. In terms of dollar volume, we're talking $1.24 billion in bearish "value." To put this metric in context, iQiyi generated top-line sales just a hair over $1 billion in Q1.This segues into the reason why many people are negative on IQ stock. Primarily, I believe it's because iQiyi is supposedly a growth stock. Fundamentally, though, revenues appear to have peaked since Q2 2018. Therefore, investors need some reason to justify the risk in holding shares.But even though IQ is among the most shorted stocks, I'd be very careful about gambling on the "dark" side. Strong support exists at the $18 level. Furthermore, a positive Q2 earnings report could blow up your short position in a bad way. H&R Block (HRB)Source: Mike Mozart via FlickrI actually like tax-preparation and services company H&R Block (NYSE:HRB). In fact, I recently included HRB stock on my list of services companies to buy. So why are shares now on this list of most shorted stocks? Because not including it would subject me to accusations of perpetuating "fake news."Seriously, though, market participants generally have a dim view on HRB stock. On the latest count, over 20% of the float is held short. In addition, the volume of the short selling amounts to $1.15 billion. For perspective, on their quarter ending April 30, 2019, the company generated $2.33 billion.So why are people heaping pain on HRB stock? Despite taxes being a universal inevitability -- the other is death -- H&R Block can't spark momentum. On a year-over-year basis, revenue dipped 2.5%. * The 10 Best Stocks to Invest in for August But speaking of fake news, the Trump administration made our tax code incredibly complicated, in my humble opinion. Therefore, the longer-term narrative for HRB stock is positive. Still, I don't begrudge a short-term negative trade as long as you know what you're doing. Match Group (MTCH)Source: Bixentro via FlickrIn my view, Match Group (NASDAQ:MTCH) represents one of the top services companies you can buy today. Namely, I'm bullish on MTCH stock because the underlying culture has changed dramatically. People just don't view online dating with the same stigma and ridicule that they used to. Unfortunately, that sentiment alone isn't enough to take MTCH off the list of most shorted stocks.In fact, as of mid-July, Match Group leads all other negatively traded securities. Dubiously, 38.5% of the float in MTCH stock is held short. The volume of short selling amounts to $1.5 billion. That's significant considering that its Q1 2019 revenue totaled $465 million.Still, why does Wall Street hate MTCH stock so much? I believe it's a combination of technical and fundamental dynamics. Since its initial public offering in 2015, shares have produced some massive annual returns. But the revenue trend appears to have matured. This suggests MTCH stock will eventually cool down.However, compared to the most shorted stocks, the bearish play here is risky. Essentially, Match Group owns the major relationship-centric social media brands. Since the search for love is universal, I don't want to get too cute with MTCH stock. Zillow Group (Z, ZG)Source: Shutterstock On the surface, real estate database company Zillow Group (NASDAQ:Z, NASDAQ:ZG) should rank among the best publicly traded companies. And to be fair, Z stock has performed very well this year, gaining over 58% year-to-date. A strong labor market and economy bolsters the bullish case for this organization. So why then is Zillow one of the most shorted stocks this year?Before I provide my answer, let's take a look at some key statistics. Nearly 22% of the float in ZG stock is held short. The volume of short selling equals $1.29 billion. For perspective, the company's Q1 revenue totaled $454 million.Despite outward appearances, I'm not terribly surprised that the bears are chomping at the bit for Z stock. Sure, the economy and the labor market look great on paper. However, real estate in key markets such as Los Angeles is only available to the affluent and the privileged.Plus, ZG stock may have a demographic problem. Although millennials represent the largest workforce in America, they're buying homes later and at lower rates than prior generations. And if we have a recession, this trend will worsen. * The 10 Best Stocks to Invest in for August Based on these facts, you might have a good shot at profitability in short selling Z stock. Advanced Micro Devices (AMD)Over the trailing year, semiconductor firms have become a mixed bag. But Advanced Micro Devices (NASDAQ:AMD) represents the positive end of that mix. With newfound vigor, the company has taken the fight to established industry leaders Nvidia (NASDAQ:NVDA) and Intel (NASDAQ:INTC). But despite what appears to be a strong case for AMD stock, the equity is on the list of most shorted stocks.I know we have a lot of passionate buyers of AMD stock, so don't kill the messenger. But as of the last count, 12.6% of its float was held short. Compared to the most shorted stocks, that doesn't sound too bad. However, the volume of short selling amounts to nearly $4 billion. For perspective, AMD generated $1.27 billion in sales for Q1 2019.But if the underlying company is enjoying a celebrated recovery, why is it compared to the most shorted stocks? Primarily, I believe that the technical enthusiasm has outpaced the broader market fundamentals. Although AMD stock has nearly doubled since the start of this year, we still have a worrying situation with the U.S.-China trade war.Also, AMD stock has moved higher while the competition remains relatively deflated. Thus, investors are seeking the better deal in the semiconductor space, which is probably not AMD. Western Union (WU)Source: Shutterstock Based purely on the print, Western Union (NYSE:WU) presides over a solid business. Money transfers, especially international ones, require specialized acumen. And for conservative investors, WU stock pays a generous dividend with a yield of 3.8%. However, these attributes have not helped shares from falling into the list of most shorted stocks.According to the most recent data, 12.5% of the float in WU stock is held short. The volume of short selling totals $1.14 billion. These states place Western Union roughly in the middle of the pack compared to the most shorted stocks.And while the company may have a solid business, I'm not taken aback that the Street has gone negative. For one thing, Western Union's services are expensive. More critically, new technologies will allow competitors to seriously disrupt WU stock and steal market share. * 7 Recession-Proof Stocks to Buy as the Boom Ends But my biggest longer-term concern? That would be the blockchain and the resultant cryptocurrencies. Of course, the prices of these digital assets have incurred volatility recently. Still, that doesn't take away from the fact that the blockchain offers a radical solution to monetary transfers. Therefore, I don't think this is a bad short sell if you can stomach the risk.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Small-Cap Stocks to Buy Before They Grow Up * 7 Stocks to Buy With Over 20% Upside From Current Levels * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk The post 8 of the Most Shorted Stocks in the Markets Right Now appeared first on InvestorPlace.
Dashed hopes have come to define iQiyi (NASDAQ:IQ) stock since its March 2018 IPO. Three months after its debut, iQiyi stock had risen by more than 150%. However, within six months, it had given back all those gains, and then some.Source: Shutterstock IQ stock doubled in price between December and February, but now the equity has again fallen back towards the original IPO price. * The 10 Best Stocks to Invest in for August iQiyi will continue to benefit from significant revenue growth. However, political and economic conditions will prevent those gains from boosting IQ stock.InvestorPlace - Stock Market News, Stock Advice & Trading Tips What's Good for Iqiyi Does Not Seem to Help IQ StockMany compare iQiyi to a similar U.S.-based company, Netflix (NASDAQ:NFLX). However, the platform seems to come closer to Alphabet's (NASDAQ:GOOGL, NASDAQ:GOOG) YouTube with a content budget.Admittedly, they have brought creativity by incorporating editing software from Adobe (NASDAQ:ADBE) to change stories and plot lines. As I mentioned in a previous article, they want consumers to think of them as the next Disney (NYSE:DIS).However, this creativity has failed to translate into massive growth or stock gains. China may hold the advantage of operating in a developing market with a population almost four times as large as that of the U.S. However, as our own Tom Taulli points out, it has "lost its mojo." Even after hitting the 100 million subscriber mark, analysts expect year-over-year revenue growth to slow from 29.9% in the last quarter to about 15.2% in Q2.iQiyi also faces increasing competition from giants such as Alibaba (NYSE:BABA) and Tencent (OTCMKTS:TCEHY). Both are large, profitable companies that can fund a content war. IQ stock will have to rely on outside funding for such endeavors. Analysts expect iQiyi to lose $1.81 per share this year, and Wall Street does not predict a profit until at least 2021.Also, the performance of IQ stock has likely dispelled any notions that iQiyi will become a second chance for those who missed the move higher in Netflix stock. More than 16 months have passed since Baidu (NASDAQ:BIDU) spun it off into a separate company. IQ currently trades at just under $19 per share, barely above its IPO price. At a price-to-sales (PS) ratio of only 3.5, traders appear in no mood to bid iQiyi stock to Netflix-like valuations. Numerous Factors Hold Down IQ StockI think IQ stock fails to gain that kind of traction for several reasons. Netflix operated for years by staying ahead of its competition. iQiyi has no such benefit. Moreover, ad-related revenue growth has slowed considerably. Many businesses have not taken with the ad platform, and it has barred some from its ad platform out of fear of regulatory authorities.Still, I think the overriding factors are the macroeconomy and geopolitics. A slowing economy might presumably help iQiyi as fewer people working would probably bring higher viewership. However, stocks overall tend to underperform in a slowing economy.Moreover, we must remember that so-called "Chinese stocks" are actually Cayman Islands-based holding companies who represent Chinese firms. As a result, traders have not bid these stocks as high as their American counterparts. This does not affect only IQ. Alibaba stock has faced a similar struggle. That trend could worsen if the economy slows. The Bottom LineInvestors may continue to regard iQiyi as the "Netflix of China," however, political and economic conditions will deter any Netflix-like valuations in IQ stock. iQiyi has reached its 100 million subscriber milestone, and revenues continue to grow. Some believe this will turn iQiyi into a profitable company by 2021.That has not translated into significant gains for IQ stock. Many cite declining ad revenues and competition. The ongoing trade war also continues to hurt Chinese stocks and the Chinese economy overall.Still, I think traders cannot fully get past the fact that IQ stock is not truly stock in iQiyi. I do not see a significant chance on iQiyi reneging on the agreements that keep IQ stock afloat. However, as long as iQiyi stock remains a proxy, I see its growth potential as limited.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks to Buy With Over 20% Upside From Current Levels * The 10 Best Stocks to Invest in for August * 6 Upcoming IPOs for August The post Economy, Politics Will Always Preclude High Valuations in iQiyi Stock appeared first on InvestorPlace.
IQIYI, Inc. Sponsored ADR (IQ) closed the most recent trading day at $18.93, moving -0.53% from the previous trading session.
The IPO market has been strong, but iQiyi (NASDAQ:IQ) stock has not joined the party. Since becoming public last year, the shares are up a mere 6% or so, even though the company is often called the Netflix (NASDAQ:NFLX) of China.Source: Shutterstock But with expectations kind of soft for IQ, could this be a good time to buy IQ stock? Or should investors hold off for now? Well,IQ stock is certainly showing signs of momentum. * 7 Stocks to Buy With Over 20% Upside From Current Levels During the quarter, IQ did report a big-time achievement: IQ's subscriber base exceeded 100 million for the first time.InvestorPlace - Stock Market News, Stock Advice & Trading TipsHere's what the CEO and founder of IQ, Dr. Yu Gong, said: "Leveraging our exceptional capabilities in producing original content and deploying innovative AI technology, we have achieved remarkable membership conversion through our relentless efforts to cater to the diverse entertainment needs of our users and optimize their experience on our platform. Chinese consumers are increasingly willing to pay for high-quality content, a trend underpinned by the rapid evolvement of the entertainment industry and technology in China."And the company had some other notable highlights during the quarter: * At the Mobile World Congress (MWC) in Shanghai, the Central Radio and TV Station, Shanghai General Station and the CCTV Financial Channel jointly granted IQ the "Mobile Internet Innovation Pioneer Award." IQ received the award mainly due to its use of cutting-edge AI (Artificial Intelligence) and VR (Virtual Reality) for content creation. After the news of the award was released, IQ stock jumped by 10%. * IQ launched an interactive video-platform plug-in that can be utilized in conjunction with video-editing software from Adobe (NASDAQ:ADBE). Using IQ's plug-in, a producer can easily change plots and edit story lines * IQ hosted the 2019 VIP Fan Carnival in Shanghai, which included more than 60 celebrities and 7,000 fans. Held in partnership with Weibo Corp (NASDAQ:WB), the event attracted about 1 billion views.But IQ's growth is still likely to meaningfully decelerate. For example, in Q2 analysts, on average, expect its revenues to climb by 9% year-over-year to $1.02 billion. In Q1, the company's top line jumped 43% YoY. The company's losses are also expected to continue. Analysts' average estimate is a loss of 44 cents per share of IQ stock (during the same period a year ago, the loss was 45 cents per share of IQ stock). The Issues With iQiyi StockIQ faces some tough challenges. One hurdle is the wild card of regulation. Keep in mind that the Chinese government has recently instituted new requirements for online video - with a focus on historical dramas -- which could hamper IQ's growth and hurt IQ stock.Next, the competitive environment remains intense. IQ must fight against rivals like Tencent (OTCMKTS:TCEHY) and Alibaba (NYSE:BABA), which have massive platforms and enormous financial resources.And while IQ has a hefty subscription base, the monthly payments are only$1.50 to $2 a month (IQ, however, also generates ad revenues). Furthermore, another InvestorPlace columnist, Josh Enomoto wrote: "Moreover, from a historical perspective, the Chinese don't value media content as much as we do. For decades, China was ground zero for content piracy. Guess what? Nothing has changed. Under this context, I just don't see Chinese consumers forking over their hard-earned yuan for something that they can get for free. That poses major challenges for IQ stock."In the meantime, IQ continues to spend significant amounts on original content. And those costs are likely to escalate, as IQ is planning to develop movies.In other words, it could be tough for IQ to become profitable. That is why the company has continued to raise money by a variety of means, including its recent $1 billion convertible bond offering. That move was not encouraging, as it came relatively soon after the IPO of IQ stock. The Bottom Line on IQ StockEven though the expectations for iQiyi stock are far from robust, the shares may not be worth buying right now. The company faces some tough headwinds - and they could easily cause its guidance to miss consensus expectations. So for now, investors shouldn't rush to buy IQ stock.Tom Taulli is the author of the upcoming book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Small-Cap Stocks to Buy Before They Grow Up * 7 Stocks to Buy With Over 20% Upside From Current Levels * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk The post Can iQiyi Stock Get Its Mojo Back? appeared first on InvestorPlace.
Today we've highlighted 10 stocks that are currently trading for under $20 per share. All of these stocks sport a Zacks Rank 2 (Buy) or better at the moment...
BEIJING, July 29, 2019 -- iQIYI, Inc. (NASDAQ: IQ) ("iQIYI" or the "Company"), an innovative market-leading online entertainment service in China, today announced that it will.
When Chinese streaming company iQiyi (NASDAQ:IQ) had its initial public offering last year, it almost immediately rewarded early speculators. From its $18 starting point, IQ stock jumped well above $40 in a matter of months. But in short order, shares hemorrhaged badly, at one point dipping sharply below their IPO price.Source: Shutterstock As if to tease those early believers, iQiyi stock offered a repeat performance this year. From subterranean levels in January, IQ briefly mounted a challenge toward the $30 mark. Similar to what happened last year, sentiment quickly soared when investors realized that the fundamentals didn't quite justify the bullishness.We're essentially back at square one. IQ stock currently trades hands at just over $19 a pop, less than 6% above the IPO price. Disappointment doesn't quite do this situation justice, considering that Chinese firms like Alibaba (NYSE:BABA) and JD.com (NASDAQ:JD) have performed relatively well this year.InvestorPlace - Stock Market News, Stock Advice & Trading TipsOn the other hand, iQiyi stock is incredibly deflated from its all-time highs. More importantly, the underlying company has earned the unofficial title of China's Netflix (NASDAQ:NFLX). IQ has 100 million subscribers. And as our own Jamie Johnson noted, 98% of them are paying customers. * 7 Oversold Stocks To Buy Right Now Plus, iQiyi has no shortage in terms of ambition. A few months back, CNBC reported that the company is rolling out an original movie business. With Chinese ex-patriots all over the world, this strategy represents a major boon for IQ stock.Does this mean you should bet on iQiyi stock? Not really, and here are three reasons why: IQ Stock: Growth Stock Ain't GrowingWhen people compare iQiyi with Netflix, they're almost always doing so because of their shared streaming platform. But if we're making that comparison, it's fair to have similar expectations for iQiyi stock from a technical perspective.In other words, NFLX is a growth stock. If we're being consistent, that descriptor should apply to IQ stock as well.And for the most part, no one is going to argue against this point. After all, China is still a developing nation. On a GDP per-capita basis, its citizens are poor because the Asian juggernaut has quadruple the U.S. population. Thus, as much growth as China has witnessed, more upside potential exists.But when it comes to IQ stock, that potential appears tapped out. In the second quarter of 2018, the Chinese streamer generated $969 million in revenue. In the most recent Q1 2019 earnings report, management disclosed top-line sales of $1.04 billion. Click to EnlargeSo in three quarters, sales grew a little over 7%: that sounds like a boring dividend-bearing blue chip mired in a mature, saturated market. Certainly, it's not worthy of being compared to one of the most exciting and transformative companies in the modern era.Therefore, unless you have some compelling reason to believe that Q2 will bring home the goods, I'd avoid iQiyi stock. Negative Earnings Raise Eyebrows for IQ StockI'm not one to harp on negative earnings. As many InvestorPlace readers may know, I'm particularly fond of the legal marijuana industry. Therefore, I'll never get on my red-ink high horse unless I have to.But with IQ stock, I must do exactly that. Let's start with the obvious headwind. As I explained above, many folks associate iQiyi with Netflix, a veritable growth stock. Even after all this time, Netflix consistently reports strong, double-digit growth on a year-over-year basis.IQ stock? We're going to see single-digit growth in Q2 2019 unless something big happens.But the worrisome part here is that investors can forgive Netflix for running key financial metrics into the red. Of course, it's not favorable, but the growth justifies the aggression. With iQiyi stock, we have plenty of aggression, but not so much in terms of results.And let's go back to Johnson's point about the 98% paying customers statistic. If that's true, I shouldn't see an acceleration of negative "growth" in operating income. But profitability across the board is bleeding badly.Barring some accounting conspiracy, this only means one thing: iQiyi isn't charging their customers an economically viable rate. Furthermore, I don't think they can, which leads to my next point: Chinese Customers Don't Want to Pay (Much)Most of the world, particularly Americans, have gotten fat off low-priced Chinese junk products. As consumers, we demand more for less, and that just drives manufacturing further into developing countries, "MAGA" be damned.Is it any surprise, then, that the emergent Chinese consumer has adopted some of our consumptive habits?Moreover, from a historical perspective, the Chinese don't value media content as much as we do. For decades, China was ground zero for content piracy. Guess what? Nothing has changed.Under this context, I just don't see Chinese consumers forking over their hard-earned yuan for something that they can get for free. That poses major challenges for IQ stock.Plus, the ongoing bitter U.S.-China trade war, along with internal distrust of the Chinese government, has incentivized belt-tightening. Combined with the specific challenges of entertainment media in China, I'd avoid iQiyi stock for the time being.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 5G Stocks to Connect Your Portfolio To * 7 Stocks to Sell This Summer Earnings Season * 6 Upcoming IPOs for July The post 3 Reasons to Tune Out of iQiyi Stock for Now appeared first on InvestorPlace.