For investors that have held iQiyi Inc (NASDAQ:IQ) shares since the beginning of the year, it has been a test of patience. After a parabolic start to the first few months of the year, IQ stock painfully gave back those gains.
But in the past week, iQiyi stock started turning its wheels. A positive turn in trade talks between the U.S. and China have contributed to the traction. Overall though, it seems the market hasn’t given IQ a fair shake despite the change in geopolitical tenor.
That seems to be changing now.
With a very positive first quarter with new milestones being hit since then, IQ stock finally has legs.
Taking Another Look at Q1 Numbers of IQ Stock
After a selloff that began in March, iQiyi stock recently demonstrated a return to strength. Additionally, another look at the fundamentals shows that the selloff was overdone to begin with.
Revenue growth was in the high double digits, posting a 43% year-over-year increase. The most significant driver here was continued strength in the membership business. Their library of premium content remains popular and thus, web traffic keeps on diverting their way. IQ has also successfully diversified its revenue streams by leveraging the valuable intellectual property of their original content.
Let’s just say that Netflix (NASDAQ:NFLX) isn’t the only company to know the value of owning IP. Like our own streaming giant, iQiyi understands critical role IP plays in the sustainability of a TV streaming subscriber model.
As Dr. Yu Gong, CEO of iQiyi, stated:
We further strengthened our platform and continued to take the lead in China’s internet video streaming industry in terms of various 3rd-party tracking metrics. Our strategy remains focused on producing high quality original content and refining our IP-centered content ecosystem which will be the key drivers for our future growth.
Thanks to their investments in content and growth, IQ is extremely well-positioned to maintain its leadership position in the future. And that should subsequently lift iQiyi stock on a longer-term basis.
IQ Keeps Adding Subscribers
Late in June, IQ announced that the number of its total subscribing members surpassed 100 million. This is an important milestone for iQiyi stock. It demonstrates that IQ too is a leader in China’s burgeoning online video-streaming industry.
The subscription business model so popular stateside has also proven popular in China as well. Naturally, then, this model has experienced substantial subscriber growth.
Q1 numbers showed that total subscribing members jumped 58% from March 31, 2018 to March 31, 2019. They’re dealing in real numbers here as well: 61.3 million subscribers to 96.8 million. In a few months’ time since reporting quarterly figures, that growth has clearly continued.
IQ has made strides in optimizing the user experience via tinkering with their platform: it’s a strategy not unlike Netflix’s, which has worked remarkably well for them. Furthermore, investing in content that viewers want to see has helped them maintain a great record in converting from free to paid membership.
The Bottom Line on IQ Stock
Global consumers seem to have a lot in common, despite varying tastes in content. Fundamentally, viewers, whether Chinese or South American or American, are willing to pay for high-quality content. Even better, they’re hungry for more.
That provides an attractive market both in terms of wealth and size for IQ to capture. So far, it’s been very successful and IQ stock has benefited.
Therefore, as more milestones are met, IQ stock should see its position as a leader in online entertainment solidify.
As of this writing, Luce Emerson did not hold a position in any of the aforementioned securities.
