Shares of iQIYI Inc. (IQ) fell 1.8% in premarket trading Friday, to extend recent losses to record lows in the wake of second-quarter results, after KeyBanc analyst Hans Chung reiterated his bullish view but slashed his price target by 27%, citing a lower third-quarter outlook amid regulatory uncertainty (link). The China-based internet video streaming services company reported early Thursday a second-quarter net loss of RMB1.4 billion ($216.4 million), or RMB1.75 a share, after a loss of RMB1.96 a year ago, and revenue that rose 3% to RMB7.6 billion ($1.2 billion). That beat consensus expectations for per-share losses of RMB2.03 and revenue of RMB7.45 billion, according to FactSet. The company expects third-quarter revenue of RMB7.62 billion to RMB8.05 billion, with the RMB7.84 midpoint of guidance below the RMB8.02 estimate of KeyBanc's Chung. He kept his rating at overweight but cut his price target to $19 from $26. "While a more restricted regulatory environment could impact the timing of content release and headwinds in subs revenue NT, IQ's capabilities of high quality, original content production remain unchanged, and we continue to view improving quality and quantity of original content could consistently drive improvement in sub churn rates over time," Chung wrote in a note to clients. The stock, which dropped 7.3% Thursday to close at a record low $9.47, has tumbled 23.1% over the past three months, while the iShares MSCI China ETF (MCHI) has shed 6.7% and the S&P 500 has gained 8.5%.
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