18.55 +0.07 (0.38%)
After hours: 5:16PM EDT
|Bid||18.55 x 2900|
|Ask||18.59 x 800|
|Day's Range||18.21 - 18.89|
|52 Week Range||14.35 - 46.23|
|Beta (3Y Monthly)||N/A|
|PE Ratio (TTM)||17.43|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||23.47|
BEIJING, June 18, 2019 /PRNewswire/ -- The restored version of heritage Chinese comedy film The Adventures of Sanmao the Waif (1949) (the "Film") has been selected to be screened at Shanghai International Film Festival (the "Festival") as part of a series of restored films for the festival's "Memories and Classics - Special Film Exhibition of the Establishment of the People's Republic of China" segment. The film was a 4k restoration that was jointly restored by iQIYI, Inc. (IQ) ("iQIYI" or the "Company"), an innovative market-leading online entertainment service in China, and Jiangsu Huaxia Film Restoration Technology Co. LTD ("Huaxia"). With the screening at the festival taking place on June 18, 2019, the Film is also due for national release at cinemas across the country on October 1, 2019, China's National Day.
Many companies wait until growth in their core industries slows down or runs out before they diversify their revenue sources by venturing into new markets.
iQiyi (IQ) plans to use AI to improve its movie and video streaming sales and cut operating costs, said CEO Yu Gong during an interview with CNBC last month.
Investors should exercise caution investing in companies that are both losing money and are listed in China. Such is the case with iQIYI(NASDAQ: IQ). Escalating trade wars between the U.S. and China scared investors away from China-based companies and that move has been costing iQIYI stock.Source: Shutterstock Even after JD.com (NASDAQ: JD) and Alibaba Group (NYSE: BABA) reported solid quarterly sales growth, the stock failed to return to yearly highs. So, with iQIYI reporting first-quarter revenue growth of 43% but a loss of around $270 million, what is there to like about this company?iQIYI's subscriber base grew an impressive 58% to 96.8 million, up from 61.3 million last year. Revenue grew 43% but net losses doubled to around $270 million. The company effectively strengthened its platform with user growth and attracted new users, increasing overall user stickiness in the quarter.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 Both DAU on the mobile app and time spent grew in the double digits, demonstrating effective marketing campaigns and premium content resonating with users. The Legend of Haolan, The Golden Eyes and The Legend are examples of premium, high-quality original drama driving subscriber growth.iQIYI's secondquarter revenue guidance of 6.91 billion - 7.29 billion yuan (USD $998 million - $1.05 billion), up 12-18% Y/Y is disappointing investors with a short-term time horizon. Revenue growth lags with the subscriber additions. If the time spent per user increases, expect iQIYI reporting higher revenue later this year.Still, the company reported ad revenue remaining largely flat compared to last year. It is maintaining a cautious outlook, factoring the macroeconomic weakness in China that is driven by the ongoing trade disputes. Opportunity in iQIYI StockiQIYI's self-produced content, premium content, and ad solution should keep a positive business momentum despite the macro headwinds ahead. Viewership should grow, driven by advertising initiatives to attract new subscribers. IQIYI is building multiple business engines to diversify.Its gaming business performed well in the first quarter while its content unit will incorporate more Chinese cultural values. The richer its content library gets, the wider an audience iQIYI will attract.IQIYI is exploring the prospects of 5G with China Unicom. It launched an 8K VR visual experience center in March. Its "Qisubo" service integrates CDN technology with 5G Mobile Edge Computing and ensures high frame rates for videos having lots of interactivity. As Qisubo matures, its service may be used in hotels, high-speed trains, airports, universities, and anywhere high-quality video content is displayed. Headwinds for iQIYI StockWith all the strong growth prospects ahead, investors cannot ignore the growing expenses and quarterly loss. SG&A expenses rose 62% in the first quarter, primarily due to higher marketing spend and increased share-based compensation. R&D costs, which rose 54%, is expected for a technology firm that must invest to stay ahead.Falling content costs could offset the other expense increases. Policy changes and regulatory censorship may have contributed to its 20% sequential drop in content costs in Q1. Looking ahead, the company expects steady content costs for the second and third quarter.Subscriber growth outpaced competitors but could slow if its peers counter iQIYI's successful initiatives. Still, strong original content and variety shows like Idol Producer resonate well with viewers.Revenue from advertising could continue lagging as the trade war remains unresolved. On the flip side, a resolution between the U.S. and China would lead to a strong rally in IQ stock. Investors will anticipate a rebound in ad revenue as trade levels rebound and the economy in China strengthens. Valuation and Your Takeaway on iQIYI StockIQ stock is getting close to its IPO price of 2018. Analysts are cautious of the stock's upside, predicting a gain of just 9%. In a five-year DCF revenue exit model, iQIYI needs revenue growing 25% annually to justify a fair value of $20.50. But after the stock fell almost 30% in the last quarter, the selling momentum needs to subside before the stock has any chance of drawing buyers again.Ideally, the U.S. and China resolve their trade dispute differences. If they do not, the stock will underperform. And since fundamentals are strong for the long-term, investors willing to hold the stock for more than a year should consider iQIYI at these levels.Disclosure: As of this writing, the author did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 * 7 Value Stocks That Are Flying Under the Radar * 6 Mouth-Watering Fast Food Stocks for Growth Investors Compare Brokers The post Subscription Numbers Make iQiyi Stock Look Like a Great Buy Here appeared first on InvestorPlace.
BEIJING, June 17, 2019 /PRNewswire/ -- iQIYI, Inc. (IQ) ("iQIYI" or the "Company"), an innovative market-leading online entertainment service in China, announced that it has reached a strategic partnership in content distribution with Malaysia's biggest pay-television service provider, Astro Malaysia Holdings Bhd ("Astro"). Based on the foundations of current cooperation on content distributions, iQIYI will expand its footprint to Malaysia by launching an iQIYI content channel with Astro under a new partnership, aiming to integrate and bring more exciting and high-quality contents to Malaysia through Astro's platform.
I must say that I haven't been too kind with iQiyi (NASDAQ:IQ), which most folks know as China's Netflix (NASDAQ:NFLX). You would think that a company that is levered toward the world's biggest market in anything would do well. A cursory look at the charts for IQ stock tells a different tale.Source: Shutterstock And while I'm not trying to pat myself on the back, I will say that recommending against buying iQiyi stock was a gamble. How many times have we seen embattled securities bounce back for absolutely ridiculous reasons? Despite my reservations about the company, IQ still has that China market in its pocket. That's not something to take lightly.That said, I also want to know what other people are thinking, especially those that have a different perspective. You don't really understand your own argument until you understand your opponent's thesis. Although I hardly consider our own Dana Blankenhorn an opponent, he did put forward a differing narrative on IQ stock.InvestorPlace - Stock Market News, Stock Advice & Trading TipsEssentially, people have the completely wrong perspective regarding iQiyi stock. As I so cavalierly mentioned up top, IQ is the Netflix of China. But Blankenhorn takes issue with that comparison because it's only accurate from a superficial angle. In reality, they're two different animals. * 7 Stocks to Buy for the Coming Recession Increasingly in American and presumably other western households, people sit down in front of the TV to stream their favorite programs. This behavior facilitates the binge-watching phenomenon that we've grown so accustomed to.But in China, things are different. They don't have time to sit on their easy chair like us lazy Americans. Instead, their consumption is mobile-centric, which specifically benefits iQiyi's platform, and IQ stock.It's also a damn good argument. Unique Chinese Consumerism Also Hurts IQ StockWorking in the financial media space, I more or less have seen it all. Again, I'm not trying to toot my own horn, but I'm rarely intellectually stimulated with investment-related editorials.Blankenhorn's point, though, hit me right in the solar plexus. It made me rethink my own thoughts about iQiyi stock. I also looked at the charts again. While I was right to be bearish on shares, right now, the discount is mighty attractive.So, have I changed my mind? I'm sorry to disappoint any ardent bulls of IQ stock, but I'm still cautious on the company longer-term.Fundamental to Blankenhorn's thesis is that iQiyi is uniquely positioned to serve the unique needs of Chinese consumers. The company's target demographic is the young, upwardly mobile Chinese professional who grew up in an era of unprecedented prosperity. To quote Blankenhorn, they're "working hard and must play hard as well."But this unique Chinese consumerism is a double-edged sword. China's consumers have expectations to stream high-quality content. That arguably benefits IQ stock. But they also expect to do so for free. Obviously, that doesn't help matters.You know what? I'm not surprised one bit. Why should anyone be? For decades, China represented ground zero for content piracy. The number of copyright violations that have occurred is simply staggering.In recent times, the Chinese government has cracked down on these content pirates and they've done a great job. However, because they did a great job, it patently shows you how deeply entrenched piracy is in China. This is a consumer culture that now expects certain things like media entertainment to be free of charge. * 7 Dark Horse Stocks Winning the Race in 2019 It's going to take a while to overturn this mindset, which is why I'm still avoiding iQiyi stock. Short-term Swing for iQiyi Stock PossibleNow, it's not all bad news for IQ stock. What I'm proposing is a longer-term narrative. In the interim, it's very possible that shares at least get a dead-cat bounce.Clearly, the magnitude of volatility has subsided. The risk is currently more to those gambling that shares decline even further. It appears that strong support exists at the $18 level, where shares are roughly trading today.If you have a short-term timeframe and don't mind the choppiness, go for it. The front-face narrative for iQiyi stock that everyone focuses on -- the Chinese Netflix -- remains popular, albeit inaccurate to Blankenhorn's point.But if you're thinking about holding this for the long-term, I'd back off and take a breather. There's a reason why the streaming units of Alibaba (NYSE:BABA), Tencent (OTCMKTS:TCEHY), and Baidu (NASDAQ:BIDU) haven't justified the hype. China has the numbers, but the numbers don't want to pay.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 High-Quality Cheap Stocks to Buy With $10 * 7 U.S. Stocks to Buy With Limited Trade War Exposure * 6 Growth Stocks That Could Be the Next Big Thing Compare Brokers The post China's Mass of Mobile-Centric Consumers Both Help and Hurt IQ Stock appeared first on InvestorPlace.
Despite the fact that Chinese consumers are watching more videos on iQiyi (NASDAQ:IQ), IQ stock continues to decline. Like most other Chinese stocks, IQ has attracted less interest as the trade war between the U.S. and China continues and iQiyi's losses widen. Since mid March, IQ stock is down 31% compared to a 12.3% decline in the Global X MSCI China Comm Services ETF (NYSEArca:CHIC).Source: Shutterstock Some investors are concerned that IQ stock has fallen so far that it could find itself retesting its 52-week, $14.35 low, about 21% below current levels. In spite of its widening financial losses, iQiyi generated impressive subscriber growth last quarter. Although IQ stock may continue to fall, further declines or event-related catalysts could make trading iQiyi stock profitable. IQ Stock Falls Despite Improving Subscriber Base, OutlookTo be sure, iQiyi has built its base by operating as a Chinese-language hybrid of Netflix (NASDAQ:NFLX) and Alphabet's (NASDAQ:GOOGL) YouTube. IQ takes the Netflix approach to content development while mimicking YouTube's strategy of allowing paying subscribers to avoid ads.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIQ has also attracted Netflix-like competition. Following Amazon's (NASDAQ:AMZN) example with Prime Video, Alibaba (NYSE:BABA) bought video service Youku Tudou while Tencent (OTCMKTS:TCEHY) launched Tencent Video. To investor disappointment, IQ stock has failed to emulate Netflix's high valuation, and IQ hasn't duplicated NFLX's net profits.On a positive note, Hollywood prospered during the Great Depression, largely because underemployed workers had more time for movies and a need for escape. * 7 Dark Horse Stocks Winning the Race in 2019 As a result, it stands to reason that the economic slowdown in China caused by the U.S.-China trade war could increase IQ's viewership. That may help explain the 30% year-over-year increase in its revenues last quarter.Nonetheless, traders continue to sell IQ stock. In the past, I pointed out that IQ stock has rightly fallen, but for the wrong reasons. Since February, that trend has reappeared. Repeating the previous pattern, trade wars, not financial losses, probably explain IQ's recent decline. iQiyi Stock Could Stop Falling SoonWhile I do not think IQ will ever attract Netflix-like valuations, I believe the decline of iQiyi stock might end soon. IQ now trades at only 2.79 times sales, well below Netflix's price-sales ratio of 9.1.Moreover, investors should not ignore IQ's subscriber growth. iQiyi reported that its subscriber base grew by about 10% quarter-over-quarter, enabling its subscriber base to overtake that of Tencent Video. Similar to Netflix a few years ago, IQ prioritizes subscriber growth over profits. Last quarter, its losses expanded. Still, despite wider losses, analysts, on average, believe IQ will become profitable in 2021.Further, while IQ stock will probably continue to fall for awhile, I see indications that it could stop dropping soon. With its 30%-plus tumble since March, one has to wonder whether IQ will retest its 52-week low of $14.35 per share. A double bottom near that level could send IQ stock higher. * 7 Stocks to Buy for the Coming Recession Also, even though I do not agree with this thinking, IQ and other Chinese stocks fluctuate based on the trade war. While more trade with the U.S. would probably reduce the amount of time Chinese citizens have for iQiyi, I have to admit that a U.S.-China trade agreement would likely send IQ stock higher. Bottom Line on IQ StockiQiyi stock may soon become a buy. It has been steadily declining since it peaked in early March. While the decline may continue, IQ is falling toward the 52-week low it achieved at the end of last year. Moreover, the trade war that has weighed on iQiyi stock and other Chinese equities should not negatively affect the company. In fact, given the history of entertainment companies in harder times, a trade war should increase iQiyi's revenues.IQ stock needs either a positive catalyst or evidence of a chart-related floor such as a double bottom near the $15 per share range. Once the stock or outside events produce such a catalyst, I think IQ can return to its March highs and perhaps beyond.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 * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy for Monster Growth * Ranking the Top 10 Stock Buybacks of Last Year * 5 Stocks Under $10 With Big Upside Potential Compare Brokers The post After a Steep Decline, China's iQiyi Stock May Become a Trade Again appeared first on InvestorPlace.
IQiyi (NASDAQ:IQ) is not "the Chinese Netflix (NASDAQ:NFLX)." IQ stock is not Netflix at all. But that's not necessarily a bad thing. Netflix, as presently constituted, might not be a good fit for China.Source: Shutterstock That's because Chinese people are highly mobile when it comes to the internet. Their screen of choice is a phone. Not a tablet, not a PC, and certainly not a TV, a phone. With a tiny screen, and wireless connections.IQ is premised on serving that market. IQiyi's service is ad supported. It's an impatient market so IQiyi content is short, punchy, more like YouTube. It's also highly interactive.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIt's just not Netflix. What IQiyi IsIQiyi delivered its latest quarterly report May 16, a net loss of $270 million, 35 cents per share, on revenue of $1 billion. * 7 Dark Horse Stocks Winning the Race in 2019 That's not terrible because growth was 45% from a year earlier, and subscription revenue (which it calls membership fees) was up about 65%, and now represents half the total. Revenue from advertising was basically flat.The market's reaction was to sell IQ stock, and it's now down 9% from where it was when the earnings came out. Speculators mistook the company's moves toward interactivity, games and original content for confusion.But IQiyi management is not confused. During the quarter they overtook Tencent Holdings (OTCMKTS:TCEHY) for the lead in the Chinese streaming market, pushing a unit of Alibaba Group Holding (NASDAQ:BABA) to third. It's a very tight race, and the fact that a $13 billion company is beating two giants worth over $400 billion each shows they know what they're doing.Put most simply, IQiyi is an entertainment company catering to young Chinese who grew up in a time of rising prosperity but are working hard and must play hard as well. Nearly every Chinese city has the rush of Manhattan Island. People are in a hurry. They're in a state of constant interruption and stimulation. This is not "Netflix and chill." What IQiyi DoesChief content officer Wang Xiaohui describes IQiyi as a "one stop entertainment platform," and entertainment can mean long-form movies that are relevant to the Chinese experience, immersive video games, even e-books like those found on the Amazon's (NASDAQ:AMZN) Kindle. The idea is that a book or game with traction can become a video, and vice versa, with IQiyi squeezing every ad dollar and view it can get out of this original content.IQiyi had 98 million subscribers at the end of the last quarter. Compare that to Netflix' 150 million, then note we're talking about a single market. IQiyi memberships don't cost much, the 98 million bringing in about $500 million, but the idea is to build a host of other online subscription revenue, advertising revenue, and licensing opportunities as well. (Netflix relies entirely on subscription revenue.) The Bottom Line for IQ stockIf you're buying IQ stock today you're betting that its managers know that their big new "original content" budget can create not just shows for tiny screens, but enduring franchises that can be monetized in several ways.IQiyi wants to break out its best content into movies for a market worth $9 billion, into streaming subscriptions for a Chinese market as big as its pay TV market, into games and even virtual reality experiences. Titles like Beijing Love Story, Wolf Warrior and Detective Chinatown don't have to travel to be profitable. They just need to be constantly renewed, like the Star Wars franchise. * 7 Stocks to Buy for the Coming Recession That's the strategy, anyway. If you like it, buy IQ stock. Just don't call it Netflix.Dana Blankenhorn is a financial and technology journalist. He is the author of a new environmental story, Bridget O'Flynn and the Bear, available now at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AMZN. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy for the Coming Recession * 10 Smart Dividend Stocks for the Rest of the Year * 5 Tech Stocks That Are Far Too Risky Right Now Compare Brokers The post IQiyi Stock is the Not Netflix of China -- And That's Okay appeared first on InvestorPlace.
BEIJING, June 12, 2019 /PRNewswire/ -- iQIYI, Inc. (IQ) ("iQIYI" or the "Company"), an innovative market-leading online entertainment company in China, announced that it has been featured by Forbes China in the "2019 Forbes China Most Innovative Companies" List (the "List"). The announcement was made at the 2019 Forbes China Innovation Summit held on June 10th in Chengdu with the theme of "Global New Innovation Technology".
Chinese streaming giant iQiyi (NASDAQ:IQ) - often dubbed the Netflix (NASDAQ:NFLX) of China - started off life on Wall Street with a bang. The company went public at $18 a share in March 2018, and by June 2018, IQ stock was above $45 as investors were drooling over the growth potential of China's video streaming market.Source: Shutterstock But, three things have happened since that June 2018 peak which have caused IQ stock to drop to below $20 today.First, China's economy slowed, mostly as a result of rising trade tensions between the U.S. and China. Second, investors realized that China consumers aren't willing to pay that much for a streaming service, yet. Third, despite big top-line growth, iQiyi's bottom-line has failed to make meaningful progress.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBroadly, then, a more negative backdrop, questions regarding long term potential, and sluggish margin progress have ultimately kept investor sentiment on IQ stock relatively depressed. * 7 S&P 500 Dividend Stocks to Buy at Least Yielding 3% Sentiment will remain depressed until those three headwinds clear up. Unfortunately, those three headwinds don't project to clear up anytime soon. As such, while IQ stock does have a huge upside potential from here, the stock likely won't realize that potential for several more months. Upside Potential Is BigInternet TV is the future of video consumption globally. Leading this global pivot into internet TV are the U.S. and China. But, because China has more people, China's streaming video market is much bigger than America's streaming video market. According to Ampere Analysis, the number of streaming subscribers in China will be nearly double that of streaming subscribers in the U.S. by the end of this year (305 million in China, versus 157 million in America).Still, at 305 million subscribers, that's only about 35% of China's internet-connected population. The U.S. has a streaming TV penetration rate of about 60%. That's why Ampere sees China's streaming market growing to almost 400 million subscribers by 2023.iQiyi is at the center of this huge and rapidly growing China video streaming market. Last quarter, the company reported nearly 100 million paying subs, up nearly 60% year-over-year. Thus, iQiyi is not only a very big player in this market (nearly 40% market share) but also one that is rapidly expanding its dominance.Given all that, the math here for big upside is easy to follow.China's streaming market hits 400 million subs by 2023. iQiyi takes home 40% share, so 160 million subs. Let's assume they can get prices to $5 per month, cheap by U.S. standards. That would yield $9.6 billion in streaming revenue. Assuming the online ad business measures around $2-3 billion by then, you are easily looking at $12 billion in revenues by 2023.Further, assuming operating margins can scale towards 10% (where Netflix has them today), that would flow into about $1 billion in net profit after taxes. Put a 20 multiple on that, and you're looking at a $20 billion market cap.IQ stock has a $13 billion market cap today. Big Risks to the Bull ThesisAlthough the IQ bull thesis is compelling on its surface, there are big risks that reveal themselves upon closer inspection of the company and its fundamentals.First, China consumers aren't accustomed to nor do they want to pay up for a streaming service. Netflix charges around $10 per month, and that's pretty much the going rate in the U.S. for streaming services. But, iQiyi reported membership revenue of roughly $1.5 billion last year on an average sub-base of 69 million. That means iQiyi brought home just under $2 per month on average from each one of its paying subscribers.That's tiny. Thus, the aforementioned $5 per month price point seems like a stretch. Maybe it winds up being just $3-4 per month. Doing the same math as above, that price point produces a future market cap target of just under $15 billion. That's a limited upside from today's levels.Second, iQiyi's margins aren't making much upward progress. The company is still running huge losses, and those losses aren't narrowing. Operating loss margin actually widened last year and total losses increased year-over-year, same with last quarter.The problem here is that at $2 per month, iQiyi isn't taking home enough in revenue per subscriber to really create a clear pathway towards profitability. Further, assuming that the price point does max out around $3-4, the upside potential in margins is limited.Overall, while iQiyi stock does have huge upside potential in an everything-goes-right scenario, present headwinds cloud visibility towards that everything goes right scenario. So long as these headwinds stick around, IQ stock will have a tough time rallying. Bottom Line on IQ StockiQiyi is the Netflix of China, but China's streaming market is very different than America's streaming market, and iQiyi's composition is very different than Netflix's composition.As such, while there is a possibility for IQ stock to turn into a huge winner, the present outlook remains troubled, meaning investors should probably wait for more signs of strength before jumping in.As of this writing, Luke Lango was long NFLX. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 S&P 500 Dividend Stocks to Buy at Least Yielding 3% * 7 Stocks to Buy That Don't Care About Tariffs * 5 Healthcare Stocks to Pick Up From the Wreckage Compare Brokers The post IQ Stock Has Too Many Headwinds to Make It a Compelling Buy appeared first on InvestorPlace.
BEIJING, June 7, 2019 /PRNewswire/ -- iQIYI, Inc. (IQ) ("iQIYI" or the "Company"), an innovative market-leading online entertainment company in China, announced that the iQIYI Knowledge App (the "App") has collaborated with renowned motivational speaker and life coach Nick Vujicic to launch a parenting curriculum of 28 lessons taught by Vujicic himself. This partnership follows IQIYI's recent strategic partnership with LinkedIn, both of which represent the company's commitment to build an IP-based ecosystem of high-quality professional learning content. Under the partnership, the App will launch Nick Vujicic's parenting curriculum with education company "Ikebang".
IQIYI, Inc. Sponsored ADR (IQ) closed the most recent trading day at $17.91, moving +1.39% from the previous trading session.
There's little doubt iQIYI (NASDAQ:IQ) has taken a successful script used by U.S. tech giants into China. But IQ stock is set up nicely for a bearish short thanks to its pricey cost of doing business and the fact that investors already refusing to recommend it.Source: Shutterstock It has been hailed as China's Netflix (NASDAQ:NFLX), and rightfully so. Not only is it a streaming provider itself, but it's also taking a deep dive into the ever-increasing original content demanded by consumers.IQ stock also has a lot in common with Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). As InvestorPlace's James Brumley noted recently, in addition to its platform for streaming theatrical content, iQIYI's user-generated content and video advertising business look very similar to Alphabet's YouTube.InvestorPlace - Stock Market News, Stock Advice & Trading TipsStill, despite the similarities to Netflix and Alphabet and inclination toward success, there are no guarantees what's worked so well for those companies will bear fruit for iQIYI. * 10 Stocks to Buy That Could Be Takeover Targets From rocketing costs and mounting losses tied to making original content, to iQIYI's business being challenged by China's slowing economy and indigenous heavyweight competition from Tencent (OTCMKTS:TCEHY) and Alibaba (NYSE:BABA), it could be a tough road ahead for IQ stock. And that difficulty was hinted at by April's mixed and concerning operating results. IQ Stock Weekly Chart Click to EnlargePrior to IQ stock's Q1 report, shares were successfully testing a 62% Fibonacci level attached to December's all-time-low and an undercut variation on the classic double-bottom pattern. But earnings produced the equivalent of a shot over the bow for iQIYI bulls.The failure to hold the 62% retracement level is one that many technicians see as a warning of continued weakness and ultimately, a full-blown challenge of the cycle low. In the case of IQ stock, this would mean a test of the undercut double-bottom. That's roughly 18% - 19% below today's share price. Furthermore, whether that price action would result in some sort of meaningful bottom is anybody's guess.As such, the case for shorting IQ stock within its existing bearish trend does maintain some obvious support. Backing up this position, shares this week have also breached the lesser 76% level while taking out a two-week doji and inside candlestick bottoming pattern.If traders are comfortable with the risks inherent in shorting a more volatile stock like IQ, the suggestion is to use a 10% stop-loss. That's an exit that makes sense. It also makes sense knowing today's bearish storyline, just like with NFLX stock, could always be up for a more enthusiastic rewrite in the months ahead.Disclosure: 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 * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 4 FANG Stocks Won't Be Bitten By Regulation Threats * 10 Stocks to Buy That Could Be Takeover Targets * 4 Big Bank Stocks Rebounding Compare Brokers The post Why Iam Bearish on iQIYI Stock Today appeared first on InvestorPlace.
About a year ago, the stock of Chinese online TV and movie platform iQiyi (NASDAQ:IQ) was trading at about $40, but this would represent the peak. Since then, iQiyi stock has plunged to about $18, which is the same level the public offering was priced at back in March 2018.Source: Shutterstock IQ was a spin-off from Baidu (NASDAQ:BIDU), which is a Chinese-based search engine. And by the way, BIDU stock has had a much worse performance! During the past year, BIDU shares have gone from $273 to $110, putting the market cap at $39 billion. A big reason for this fall-off has been a rapid deterioration of the growth rate.Then what now for iQiyi stock? Is there a value her or should investors hold back? Well, on the positive side, the market size for the company is enormous. Plus, as in the U.S., there is a secular trend towards streamlining in China and the emergence of 5G should be a strong catalyst.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWhile all this is encouraging, I still think investors should be cautious. * 10 Stocks to Buy That Could Be Takeover Targets Here's a look at three notable risks: IQ Stock: CompetitioniQiyi is often called the Netflix (NASDAQ:NFLX) of China, but this really is misleading.First of all, unlike NFLX in the early days, IQ must deal with several massive competitors, which include Alibaba (NYSE:BABA) and Tencent (OTCMKTS:TCEHY). These companies have tremendous brands, powerful technology platforms and extensive distribution.As for IQ, it's main partner, Baidu, is fairly weak right now. If anything, the company's search business is getting disrupted from BABA and Tencent, whose WeChat property has over 1 billion users.Next, IQ has a blended business model that includes subscriptions and advertising. Unfortunately, the advertising business has been coming under much pressure. Consider that, as the Chinese economy slows down, it has been easy for companies to cut back on these expenditures.It also appears that IQ has not been effective in optimizing its ad monetization. This is actually perplexing since BIDU has much experience with this. IQ Stock: ContentA big part of the strategy for IQ is to produce original content. No doubt, this comes straight from the Netflix playbook.Despite this, producing content is often dicey. Even some of the premier studios, like Disney (NYSE:DIS), can produce huge flops.Yet there is an added risk for IQ stock: government restrictions and censorship in China. Such things provide an added layer of risk to the content strategy.Besides, original content is expensive. This helps to explain the spiking losses iQiyi stock has sustained. In the latest quarter, they came to a hefty $270.3 million, coming to 4.5 times the losses reported a year ago. IQ Stock: GeopoliticsOf course, the trade dispute between the U.S. and China is taking a toll, and the situation is likely to get worse as President Trump has moved to increase tariffs. It also does not help that both sides seem far apart in terms of coming to some type of agreement.The Chinese government has been taking aggressive actions, such as with lower interest rates and taxes, but the results have been mixed. Then again, trade represents a key part of growth for China. The tariffs are also stirring up much uncertainty, which will make it tougher for businesses to initiate capital investments.Regarding iQiyi stock, the growth has already been decelerating. In the current quarter, revenues are forecasted to increase by 12% to 18%, which compares to 43% in Q1. For the most part, given the sluggishness in China, this slowdown may not be a temporary thing either.Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. 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 * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 4 FANG Stocks Won't Be Bitten By Regulation Threats * 10 Stocks to Buy That Could Be Takeover Targets * 4 Big Bank Stocks Rebounding Compare Brokers The post 3 Reasons to Exercise Extreme Caution When It Comes to iQiyi Stock appeared first on InvestorPlace.
In November of last year, I argued that iQiyi (NASDAQ:IQ) was the best play for investors bullish on Chinese stocks. IQ stock had fallen 56% from its highs at that point and the risks facing the shares were clear. But the argument then was that for investors willing to take on the risk, iQiyi stock had the potentially highest reward of its peers.Source: Shutterstock Admittedly, the call was a bit early -- IQ would keep falling into December -- but for a moment looked wise. iQiyi stock rallied nicely in the New Year. After a strong Q4 earnings report in February, the stock briefly was up 100% in 2019 alone. But sentiment toward Chinese stocks again turned and IQ stock slid after Q1 earnings thanks to disappointing guidance. IQ has given back much of its gains and actually sits roughly 10% below where it did when I recommended last year.In short, here we are again. And IQ again looks like a buy. To be sure, it's a high-risk buy. The company remains unprofitable, and even on a price-to-revenue basis not particularly cheap. Sentiment toward China plays can get worse amid trade war and tariff fears. The chart is ugly, too: investors may not want to catch the proverbial falling knife until it lands.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut the story now is much the same as it was six months ago: IQ is going to rally big, if and when sentiment reverses. And looked at in a certain light, iQiyi stock does look cheap. With a user base set to top 100 million, iQiyi is on the right path. At some point, IQ will reflect that … and hopefully for good. IQ Stock and NFLX StockWhile iQiyi often is referred to as the Netflix (NASDAQ:NFLX) of China, the comparison isn't perfect. Much of the company's content is closer to the user-generated stuff of the YouTube unit of Alphabet (NASDAQ:GOOGL) than to the in-house offerings developed by Netflix. iQiyi, unsurprisingly, can't take the same pricing or spend the same money as Netflix for that in-house content. Chinese consumers don't have the same income and, most notably, Netflix never had the same competition. * 7 Stocks to Buy for Monster Growth Indeed, iQiyi appears to have just regained the subscriber lead from Tencent Holdings' (OTCMKTS:TCEHY) Tencent Video though only by a thin margin. Whereas Netflix has dominated Hulu (now mostly owned by Disney (NYSE:DIS)) pretty much since its pivot away from its former DVD-by-mail business model, iQiyi has been neck and neck with Tencent Video while also competing with Alibaba (NYSE:BABA) unit Youku Tudou.Still, Netflix represents an interesting guidepost for trying to value IQ stock. That's particularly important given that iQiyi remains unprofitable as it invests in content and marketing. And the comparison does suggest at least one reason to be bullish -- again -- on IQ stock. iQiyi Stock Per SubscriberIt stands to reason that, at the moment, an iQiyi subscriber would be less valuable than a Netflix subscriber. For one, iQiyi pricing is much lower, and likely will stay that way. (That said, many of Netflix's international markets provide much less revenue per subscriber than does the U.S.) The risk is higher: China's single-party government could in theory crack down at any time.Even with those caveats, however, the gap between subscriber valuations for the two companies has grown. At one point last year, an iQiyi subscriber was worth roughly 30% of a Netflix subscriber. By November, the figure was roughly 20%. It's now 125%. A Netflix subscriber is valued at more than $1,000 (including Netflix debt); the similar figure for iQiyi is just $125.Again, there should be a gap between the two. But there's an argument that the gap shouldn't be this wide -- and shouldn't be expanding. iQiyi's penetration is much lower, at a little over 20% of Chinese households. Netflix, in the U.S., is near 50%. Obviously, many of those Chinese households don't have internet access -- more than half are lacking -- but over time they will. Longer-term, iQiyi has the ability to grow its penetration faster than Netflix, particularly in their respective home markets. * 6 Big Dividend Stocks to Buy as Yields Plunge Of course, it's also possible that NFLX stock is overvalued and that a Netflix subscriber isn't worth $1,000+, or close. I've questioned that stock's valuation in the past. Still, it does seem like iQiyi users worth more than just a fraction of Netflix users, particularly considering the latter company's overseas pricing.And if that gap does narrow, IQ has upside. Get the figure back to last year's 25%+, assuming NFLX stock continues to trade sideways, and IQ stock more than doubles. Why IQ Over Other China Plays?One metric doesn't make a bull case, nor does it guarantee that iQiyi stock is going to double. To be sure, this is a risky play for obvious reasons. It's an unprofitable Chinese content creator still valued at 3x+ revenue. As I wrote in November, IQ stock unquestionably can wind up trading to zero. Alibaba and Tencent are fearsome competitors, and there's no shortage of in-country risk.This is a "feel" case to some degree. At the least, an investor has to be bullish on China long-term -- and to see the recent declines in Chinese stocks as overdone. And that's kind of the point.Assuming those two things are true, investors should be targeting the higher-risk plays. The more cautious route is to go with BABA (though that stock has its own significant risks), TCEHY, or JD.com (NASDAQ:JD). Those established -- and profitable -- companies no doubt will benefit if and when investors return to Chinese plays.But in that scenario -- unless iQiyi is hammered by competition -- IQ stock is going to be the better play. Higher risk generally equals higher reward.To put it another, more aggressive, way: Go big or go home. If an investor wants to go big on China, I again believe IQ is the play to make.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 6 Retailers Including Disney Agree to Ditch On-Call Scheduling * The 10 Best Stocks for 2019 -- So Far * 7 Small-Cap ETFs to Buy Now Compare Brokers The post iQiyi Stock Again Looks Like the Best Bet for China Bulls appeared first on InvestorPlace.
BEIJING, June 4, 2019 /PRNewswire/ -- iQIYI, Inc. (IQ) ("iQIYI" or the "Company"), an innovative market-leading online entertainment company in China, announced that its animated film Spycies (the "Film") made the five finalists in the Animated Films category of the Golden Goblet Award at the 22nd Shanghai International Film Festival. With the development of animation in China over the last few decades, Chinese animators have made unremitting efforts on creating domestically produced animated films, which has led to the emergence of many highly reputable Chinese animated works, such as White Snake, Big Fish & Begonia, Monkey King: Hero is Back and many more.
Nobody really expected China's streaming outfit, iQiyi, (NASDAQ:IQ) to turn a profit in its infancy. Speculators stepped into IQ stock anyway, anticipating a slow but discernible shift towards profitability would propel the shares higher.Source: Shutterstock If that's going to happen at all, it's likely to happen within the next three years. If it doesn't happen by then, it may not occur at all.Given that powerhouses like Tencent (OTCMKTS:TCEHY) and Alibaba (NYSE:BABA) are also in the streaming business and reasonably well-entrenched within the Chinese market, it would be easy for the owners of IQ stock to fear the worst. That's particularly true given that IQ's revenue surged last quarter, but its operating costs grew even more. Its losses are still tremendous, despite its top-line growth, and the 35% setback iQiyi stock has suffered since March's high shows that the market is concerned about the company's outlook.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 6 Big Dividend Stocks to Buy as Yields Plunge The next three years are going to look much different than the past three have, however,as IQ's capabilities will greatly increase. IQ Is Tweaking Its Ad BusinessIQ has been called the Netflix (NASDAQ:NFLX) of China, and understandably so. But, there are differences between the companies. While IQ does sell subscription-based access to original content, its user-generated content and video advertising business looks comparable to that of Alphabet's (NASDAQ:GOOGL, NASDAQ:GOOG) YouTube.Unlike YouTube, though, IQ hasn't yet mastered the art of cost-effectively connecting advertisers with the right consumers. Last quarter, its ad revenue of $316 million was flat year-over-year.In some ways, it's unfair to complain about the company's flat ad revenue. China's economic headwind has forced some advertisers to pare back their spending in an environment that's already pretty well saturated with ads. At the same time, IQ has made a point of putting more emphasis on content creation that can be used to sell more profitable subscriptions.Regardless, realizing there's money on the table to be taken, IQ continues to refine its approach to selling ads. China's search engine giant Baidu (NASDAQ:BIDU), which owns the majority of IQ stock, continues to help the video platform tweak its advertising business.Where IQ is soon going to make radical changes, however, is on the original content front. More Content, More PlacesThe ramp-up has already started, with content costs growing 38% in the first quarter. The $943 million IQ spent on its home-grown shows and movies in Q1 was roughly twice as much as its subscription-driven revenue last quarter, and almost the same amount as its total Q1 revenue of around $1 billion.Unlike Netflix, though, iQiyi has a plan to sell much of its original content to other broadcasters.Case in point: Its crime drama The Thunder, which received rave reviews in China, is set to be aired on HBO property Red in the foreseeable future.More multi-channel distribution is in the cards. CEO Gong Yu made clear in an interview last month that for its original films "the first window of opportunity is still to screen them in movie theaters. The second window of opportunity is to show them on iQiyi, so as to maximize the total revenue."Netflix has released films in theaters as well, but only on a small scale, and only as a means of securing eligibility for film awards. For iQiyi, the approach is being viewed as a profit center in and of itself.It's a new development and could require some clever experimentation, since China's box office revenue is currently declining meaningfully IQ to Utilize AI Throughout Its BusinessIn recent months, it has become possible for artificial intelligence to create perfectly convincing video that would be difficult and expensive (if not impossible) to shoot by traditional means.But IQ's CEO said the company may not start to use that technology for another 8-15 years. However, the company may not need that much time to at least begin enjoying the lowered costs that artificial intelligence-produced video facilitates. Many of the recent blockbuster superhero films have successfully utilized AI to create scenes that movie-goers enjoyed without a moment of doubt or distraction.Moreover, IQ currently uses artificial intelligence to determine which films and videos to produce in the first place. The Bottom Line on IQ StockThese shifts are noteworthy now because they're all new. It remains to be seen, however, if they will be able to turn the tide for IQ stock. But, even if they are the much-needed changes the company needs, they like won't gain much traction this year."The bigger question will still be when content costs can fall, and we do not expect that to happen in 2019 as shows purchased last year were still expensive, and costs will be amortized this year," noted Bernstein analyst David Dai.Bernstein currently has an "underperform" rating on iQiyi stock.But those who can hold IQ for the long-term could benefit from these changes.Shelleen Shum, the forecasting director for eMarketer, is optimistic about that. She commented, "[iQiyi's] investments in premium content have clearly helped to attract more subscribers. A growing user base will add not only to its membership revenue but also help its ad business remain competitive."She added, however, "Currently, video platforms' methods for profit are generally in advertising, paid membership business, and IP development. Among these, homegrown IP and tapping IP value are key for profit, but the period needed is relatively long."But how long will the owners of IQ stock wait for IQ to prove it can work its way into the black? Three years is a plausible, defensible time frame, provided it meets the important milestones in the meantime.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 * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Sell Impacted by the Mexican Tariffs * 6 Big Dividend Stocks to Buy as Yields Plunge * The 10 Biggest Announcements From Apple WWDC 2019 Compare Brokers The post The Next Three Years Could Make or Break iQiyi Stock appeared first on InvestorPlace.
Investors can approximate the average market return by buying an index fund. While individual stocks can be big...
Chinese video-streaming service iQiyi (NASDAQ:IQ) is trading just under $19, perilously close to its March 2018 IPO price of $18. While IQ stock is still up 25% year-to-date, it's lost over 30% of its value in the last three months, as the U.S.-China trade war has intensified. Source: Shutterstock InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe instinctive reaction if you own IQ stock is to sell it and take profits, if you still have themAnother InvestorPlace columnist, Josh Enomoto recently recommended that investors stay away from IQ stock because IQ's growth has slowed, its losses have accelerated, and the company is not producing high-quality content that's universally appealing. He's not wrong. However, since iQiyi's business model resembles a hybrid of Netflix (NASDAQ:NFLX) and Roku (NASDAQ:ROKU), IQ stock provides investors with a very appealing risk/reward opportunity. At the right price, IQ stock could be a good deal for aggressive investors who are able to handle lots of volatility. $15 Would Be IdealI'm a big believer in the idea that stocks which have recently had IPOs can often be bought for less than the original price at which the shares were sold to the public. In the case of iQiyi, that's $18. At the moment, it's a dollar away from falling to its IPO price for the third time in 14 months. The first time was on the very first day of trading; the second occurred during the stock market's December correction. Canadian investment manager Stephen Jarislowsky believes that investors can often buy IPO shares for less than their original offering price within 12-24 months of going public. Given the volatility of IQ stock, I'm confident that it could fall below its IPO price for a fourth and even a fifth time over the next ten months.In March, I stated that if IQ stock were to go back into the teens, I'd certainly become bullish on iQiyi stock. If the shares fall to around $15, I'd be very enthusiastic about 'IQ stock. Here's why. Dual Streams of RevenueIQ is an exciting company that's got the potential to generate more than one profitable revenue stream, something that both Netflix and Roku haven't done on a major scale. But as Enomoto suggested, IQ has to get Chinese consumers to open their wallets if it wants to become the Netflix or the Roku of China. In the first quarter,, iQiyi's memberships accounted for 49% of the company's overall revenue; online advertising generated another 30%, and content distribution and other revenue accounted for the final 21% of its $979 million of quarterly revenue.That's good news. The bad news is that it lost $284 million, despite growing its revenue by 43% year over year. Worse still, its operating loss increased by 91% in Q1, more than double the growth of its sales. Not to worry. Roku continues to generate operating losses on much smaller revenues than iQiyi, and Netflix's operating income in 2012 was just $50 million on $3.6 billion of sales. For iQiyi to reach its growth targets, it has to lose money.The biggest concern that I have about IQ stock is that IQ's dual-track revenue stream model appears to have slowed in Q1. While its revenue from membership services grew 64% in Q1, its online advertising revenues were flat year-over-year, reducing the segment's contribution to IQ's overall revenue from 43% to 30%. That last statistic is indicative of just how much the Chinese economy has slowed in recent months. Until the trade war gets settled, IQ's dual-track revenue stream model is going to be facing a significant headwind. The Bottom Line on IQ StockWhile I like iQiyi's business model, only aggressive investors should be buying IQ stock at this point. However, if you are an aggressive investor, I'd wait until iQiyi stock drops into the mid-teens before buying it. Over the long-term, you'll be glad you did. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy for Monster Growth * Ranking the Top 10 Stock Buybacks of Last Year * 5 Stocks Under $10 With Big Upside Potential Compare Brokers The post Don't Buy iQiyi Stock Until It Drops Below $18 appeared first on InvestorPlace.
If there's been one constant for JD.com (NASDAQ:JD) stock since its 2014 IPO, it's been volatility. The chart of the JD stock price looks like a roller coaster and admittedly not a terribly pleasant one at that.Source: Daniel Cukier via FlickrJD.com stock has returned about 41% from its $19 IPO price. But that's only a 7% or so annual return over the five years - and JD.com has gained 6%, total, from its first-day close just shy of $25.To be sure, some traders have done better or worse. The round-trip in the JD.com stock price from below $20 in 2016, to $50 18 months later, and back below $20 late last year created opportunities for longs and shorts alike. External factors, most notably of late, on-again, off-again trade war worries, have driven much of the volatility, particularly over the last eight months.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Stocks to Buy for Monster Growth That volatility is likely to continue, not just for JD but other Chinese plays. But in the case of JD, patience seems likely to pay off. At the same time outside noise seems to be getting louder, JD.com's performance is getting stronger. Once that noise dies down, the stock seems likely to rise. Another Strong Quarter Boosts JD.com StockFirst quarter earnings from JD.com certainly seem to strengthen the long-term case. Both sales and earnings per share crushed analyst estimates. Revenue rose a solid 21% - even if that figure admittedly was the company's lowest growth rate since going public. Operating margins in the core business - now referred to as JD Retail - expanded a solid 60 bps year-over-year.The quarter isn't perfect. As The Motley Fool pointed out, even JD.com CEO Richard Liu admitted on the post-earnings call that profit in the quarter was "a little bit high." Slowing sales growth is a function in part of JD.com's increasing size, but the increase in revenue also was notably lighter than that of larger ecommerce rival Alibaba (NYSE:BABA).Still, the quarter seems like good news. Most notably, it seems to confirm the bullish thesis for JD.com stock that came out of a similarly strong fourth quarter report. As I wrote after that release, JD.com seemed to have clarified and strengthened its story after Q4. Worries about operating margin compression were explained by increased detail about investments in other areas, and the broader strategy seemed an echo of that of Amazon.com (NASDAQ:AMZN), focusing on revenue growth above margins.Given how successful that strategy has been for Amazon, both in terms of its growth and its stock price, the path chosen by JD.com seemed similarly attractive. A second straight blowout quarter, meanwhile, confirms that the strategy is on track. External Factors and JD.comThe report seemingly has done little for JD shares. JD.com actually is down 10% in just the last month and threatens a three-month low as I write this. It trades below levels seen ahead of the release.The problem, again, is external. JD.com spent the second half of 2018 pretty much in freefall owing mostly to fears about the Chinese economy and the impacts of the U.S.-China trade standoff. The possibility of a U.S. hike to 25% tariffs resurrected those concerns.It's not just JD.com that is selling off, either. BABA shares are down over 20% in less than four weeks. Baidu (NASDAQ:BIDU) is at a multi-year low, albeit with some help from disappointing earnings. iQiyi (NASDAQ:IQ), 58.com (NYSE:WUBA), and other Chinese plays all have pulled back as well.Relative to other Chinese stocks, in fact, JD.com stock actually has performed reasonably well. But the recent declines again show that it's impossible to separate JD.com from broader sentiment towards China.With no apparent momentum toward a trade war resolution, and another U.S. presidential election now less than 18 months away, it's likely sentiment toward the Chinese economy is going to stay rather volatile for the foreseeable future. JD Stock on the Other SideLong-term, the case for JD stock still looks attractive. But some investors may choose to either sit out near-term volatility - or look to profit from it. Put premiums for JD.com aren't particularly high at the moment, but selling the June 2020 25 strike still returns nearly 17% - while locking in a purchase price of $21.50 per share.Traders can also look to shorter-term strikes to either gain premium or capture a below-market price for JD if external fears drive another leg down in the stock.That said, investors shouldn't let those external fears overshadow the fact that JD.com, as a company, looks to be in an excellent position. As large as China's ecommerce industry is, and will be, second place likely is good enough.Efforts in brick-and-mortar retail and other investments haven't paid off yet - but some will over time. The combination of a lower share price and margin expansion has made valuation more reasonable: JD now trades at roughly 25x 2020 consensus EPS. That's likely too low given the company's opportunities.That multiple can get lower, however, particularly if broad market fears grow. And it's likely the road for JD stock going forward will be bumpy. I still believe investors willing to ride out the volatility will be handsomely rewarded in the end. But trading in JD over the last few weeks shows it will take some patience - and possibly some nerve.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy for Monster Growth * Ranking the Top 10 Stock Buybacks of Last Year * 5 Stocks Under $10 With Big Upside Potential Compare Brokers The post If You Can Stomach the Drops, JD Stock Roller Coaster Is Worth Riding appeared first on InvestorPlace.
Ride-sharing giant Uber (NYSE:UBER) made its long awaited debut on Wall Street in May, and it was one of the worst tech IPOs ever. The IPO was priced at $45 per share of Uber stock, at the low end of a reduced target range.Uber stock price opened up at $42, and closed around $41 and change, making it just the third $10 billion-plus tech company to have its stock close below its IPO price on the first day of trading.Source: Shutterstock That's not great news. Further, the Uber IPO dud came on the heels of an IPO dud by Uber's ride-sharing peer, Lyft (NASDAQ:LYFT). Thus, within a few months, the ride-sharing market took two big hits, with the broad implication being that investors should stay away from this space due to its lack of long-term growth clarity and its profitability challenges.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Stocks to Sell Amid an Escalating Trade War A possible takeaway is that investors should avoid Uber stock.But that takeaway is too simple and misses the big picture. Overall, Uber is an innovative company that's expanding its share of a huge market, while its core business is profitable and getting more profitable. The IPO was a dud only because of bad timing.So concerns about Uber stock related to the growth and profitability of Uber are overstated. Worries that the disappointing Uber IPO will permanently keep Uber stock price down are also overdone. Playing contrarian with Uber stock here and now will pay off over the long-term. Concerns Are OverstatedWhen it comes to Uber, investors have three major concerns. All three aren't significant, and don't hold water.First, some investors are concerned about the poor performance of Uber IPO. But a bad IPO doesn't equal a bad stock. The other two tech IPOs which closed lower on their first day of trading were First Data (NYSE:FDC) and iQiyi (NASDAQ:IQ).Today, FDC stock is up more than 50% from its IPO price, while IQ is up more than 10%, and would be up a lot more if it weren't for the trade war (iQiyi is a Chinese streaming company). Meanwhile, Facebook (NASDAQ:FB) had a rough first few weeks on Wall Street, too. That stock has surged about 500% from its IPO price.Thus, over he long-term, concerns about bad IPOs aren't valid.Second, some investors are concerned about the uncertainty of Uber's long-term growth outlook due to competition and autonomous vehicles (AVs).But Uber is based on a network that can easily grow. Its network consists of recruiting more drivers who lower wait times, leading to more riders, which leads to higher earnings, and more drivers. Its size is a sustainable moat in this market. Plus, because ride sharing is all about logistics and Uber is the king of logistics in this market, the introduction of AVs won't replace Uber; instead, AV producers will partner with Uber on ride sharing.Thus, over the long-term,concerns about Uber's growth will prove to be unfounded.Third, investors are worried that this company will never be comfortably profitable. There's one big problem with this thesis. Uber's core ride-sharing business is already profitable, as it generates adjusted operating margins of nearly 10%. Further, those margins are rising, and will continue to increase as Uber grows, while UberEats starts to move into profitable territory.Thus, profitability concerns won't be valid over the longer term. Uber's Growth Potential Is EnormousThe core thesis on Uber's growth outlook is quite compelling.This is an innovative company that is the undisputed king of the ride-sharing market. That market is still very small relative to its long-term potential. Ride sharing represents just a few percent of total global vehicle miles traveled. Eventually, it should represent the majority of vehicle miles traveled because roads are becoming too crowded and car ownership is becoming too expensive.Thus, the ride-sharing market should grow by leaps and bounds over the next several years. Uber, thanks to its network and ability to innovate into new, tangential ride-sharing markets, should remain the top dog in this industry. Its margins, which are already improving, should continue to rise as it grows. Its high losses will turn into high profits, boosting Uber stock price.Uber will leverage non-cyclical growth tailwinds and its large size to one day become an immensely profitable company at the epicenter of an enormous market. That sounds a lot like Amazon (NASDAQ:AMZN). That's why calling Uber the Amazon of transportation makes sense.It's also why Uber stock price will head way higher over the long-run. The Bottom Line on Uber StockUber stock had a tough start on Wall Street because the company went public in the worst week possible, amid escalating trade tensions between the U.S. and China. Those trade tensions have cooled ever since, and Uber stock is a growth name that's worth holding onto for the long run.As of this writing, Luke Lango was long UBER, LYFT, FB, and AMZN. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Sell Amid an Escalating Trade War * 5 REITs to Buy While They're Dirt Cheap * The Only 3 Marijuana Stocks You Need to Own Compare Brokers The post Why Investors Shouldn't Be Stressed About Uber Stock appeared first on InvestorPlace.