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iQIYI Inc ADR IQ

Morningstar Rating
$4.79 −0.04 (0.73%)
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Company Report

Iqiyi May See Customer Growth Hurdles Within China's Challenging Streaming Video-On-Demand Industry

We are encouraged that Iqiyi has been successful at turning around its business to generate high-single-digit operating margins, which are a significant improvement from a 30% operating loss margin since its IPO in 2018. We expect Iqiyi to maintain profitability in the near term because of expectations of lower content costs that are 50%-60% of sales, rather than the 70%-80% level prior to 2022. However, we forecast that subscription prices and memberships will grow at only low-single-digit levels, given our view that Iqiyi will have challenges in retaining customers on a consistent basis and is vulnerable to switching costs and churn.

Price vs Fair Value

IQ is trading at a 17% discount.
Price
$4.31
Fair Value
$7.30
Uncertainty
Very High
1-Star Price
$5.50
5-Star Price
$8.90
Economic Moat
Zmf
Capital Allocation
Bjlbhmhs

Bulls Say, Bears Say

Bulls

Recent profitability suggest Iqiyi may have turned a corner and can maintain profitability despite slow membership growth.

Bears

Lack of differentiation in platform content and saturation of other streaming platforms may hamper growth efforts.

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News

Trading Information

Previous Close Price
$4.82
Day Range
$4.654.84
52-Week Range
$3.066.47
Bid/Ask
$4.78 / $4.79
Market Cap
$4.59 Bil
Volume/Avg
4.5 Mil / 7.9 Mil

Key Statistics

Price/Earnings (Normalized)
11.64
Price/Sales
1.04
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield

Company Profile

Iqiyi is a leading streaming video-on-demand company in China that generates revenue through a mostly subscription basis and has over 100 million paying subscribers and 500 million monthly average users on its platform. The platform also provides user-generated content in long-form videos free of charge to nonpaying users, monetized through video-brand ads and performance-based ads. The company self-produces much of the subscription content and also generates revenue through content distribution, gaming, and IP licensing. Iqiyi competes in a crowded industry with Tencent Video, Alibaba's Youku, ByteDance's MangoTV, and Tencent-backed Bilibili. The company is 45.5% and 5.1% owned by Baidu and Xiaomi, respectively. Baidu also held 89.3% of the voting power as of end-February 2023.
Sector
Communication Services
Industry
Entertainment
Stock Style Box
Total Number of Employees
4,788

Competitors

Valuation

Metric
IQ
DIS
09626
Price/Earnings (Normalized)
11.6428.48
Price/Book Value
2.712.072.28
Price/Sales
1.042.351.45
Price/Cash Flow
1.9916.58
Price/Earnings
IQ
DIS
09626

Financial Strength

Metric
IQ
DIS
09626
Quick Ratio
0.510.690.97
Current Ratio
0.570.841.03
Interest Coverage
2.573.37−30.99
Quick Ratio
IQ
DIS
09626

Profitability

Metric
IQ
DIS
09626
Return on Assets (Normalized)
6.13%4.22%−9.27%
Return on Equity (Normalized)
27.71%8.71%−21.62%
Return on Invested Capital (Normalized)
12.75%5.86%−14.54%
Return on Assets
IQ
DIS
09626
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