Chinese internet streaming giant iQiyi (NASDAQ:IQ) went public at $18 per share in late March 2018. By mid-June 2018, IQ stock was trading above $40.

Why the huge rally in IQ stock? iQiyi was being called the Netflix (NASDAQ:NFLX) of China, a label which made the stock look extremely attractive considering Netflix’s recent red-hot growth, the lack of a Netflix presence in China, and the huge number of internet users in China.

Since that big rally, IQ stock has fallen flat. IQ stock dropped in a big way to $30 in early July and is now down below $27.

Why the big drop in IQ stock? Despite the robust long-term growth narrative, IQ stock was shrouded in a lot of near-term noise.

There have been trade-war risks which threatened economic health in China, and competition concerns that have added uncertainty to the company’s long-term growth potential. Plus, it isn’t all that unusual for freshly public stocks to pop and drop in dramatic fashion as investors rethink initial enthusiasm.

In the big picture, I think IQ stock is a long-term winner. Near-term trade-war noise might keep shares depressed for the foreseeable future. But, over the next three to five years, this is a stock which could easily double thanks to robust long-term growth tailwinds in China’s internet streaming market.

Here’s a deeper look.

Expect Near-Term Turbulence

When it comes to IQ stock, investors should expect a healthy amount of near-term turbulence.

For starters, this is a freshly public, not-that-big China tech stock. That inherently implies a lot of volatility, even without trade-war risks. Throw in trade-war risks, and you get a near-term path that promises to be bumpy. If the trade war heats up, IQ stock could suffer as investors worry about potential fallout.

You also have a healthy amount of competition risks when it comes to IQ stock. China doesn’t have Netflix or YouTube. But, they do have Tencent‘s (OTCMKTS:TCEHY) Video and Alibaba‘s (NYSE:BABA) Youku Tudou, both of which are sizable competitors to iQiyi. Any sign of iQiyi losing share to these competitors could result in material weakness in shares.

There is also the fact that iQiyi has a $20 billion-plus market cap. Yet, the company isn’t profitable, and revenues were under $3 billion last year. Thus, the valuation on a trailing basis does look extended. So, if there isn’t big growth going forward, IQ stock could drop.

Altogether, this isn’t a low-risk stock. And, in the near-term, the road will be bumpy.

Long-Term Prospects Are Promising

If you can stomach the near-term volatility, then I think IQ stock is worth holding onto for the long haul.

iQiyi is a bit of blend of YouTube and Netflix. There is a free, ad-supported tier which 400 million-plus people use, and there is a paid tier with premium content and other perks which 50 million-plus people use.

From this perspective, this is a company that is attacking two huge markets. On one side, iQiyi is building a huge digital advertising business behind ad-supported internet video, much like YouTube. On the other side, iQiyi is building a huge paid streaming business supported by premium subscriptions, much like Netflix.

Neither of these businesses are that big for iQiyi, and that makes the long-term growth narrative look quite promising.

Last year, the digital ad business did under $1.3 billion in revenues on 420 million monthly active users, implying an anemic advertising ARPU of $3.

By comparison, there are 770 million internet users in China, and Facebook‘s (NASDAQ:FB) ARPU in its core U.S. and Canada markets is close to $100. Therefore, iQIYI has tremendous room to both grow users and ARPU in its digital-ad business.

On the streaming side, 50 million subs seems like a solid number. But, China has around 250 million and growing internet households. So, iQiyi has an internet household penetration rate of just 20% in China.

By comparison, Netflix has nearly 60 million subs in the U.S. in a market where there are about 120 million internet households, meaning Netflix has a 50% internet household penetration rate in the U.S.

From that perspective, assuming iQiyi remains the dominant paid streaming platform in China, there is runway for this company to more than double its subscriber base to 125 million plus over the next several years.

In the big picture, iQiyi is one part nascent digital advertising business oozing with growth potential, and one part nascent paid video streaming business oozing with growth potential. Put both of those businesses together, and you get a company with a big-time growth narrative over the next three to five years. During that stretch, I maintain that IQ stock could double.

Bottom Line on IQ Stock

This isn’t a low-risk buy. But, it is a high-reward stock that has tons of growth potential over the next several years.

If iQIYI realizes its massive growth potential in China’s rapidly growing digital advertising and paid streaming markets, then IQ stock could double over the next three to five years.

As of this writing, Luke Lango was long IQ and FB.