iQIYI, Inc.

What is iQIYI?

Company Overview

iQIYI, Inc. is a leading innovative online entertainment service in the Chinese market.

Formerly Qiyi.com, Inc. changed its name to iQIYI, Inc. in November 2017. iQIYI, Inc. was incorporated in 2009 and is headquartered in Beijing, China. iQIYI, Inc. is a subsidiary of Baidu Holdings Limited.

The company offers various products and services comprising Internet video, online games, live streaming, online literature, animations, e-commerce, and social media platforms. It operates a platform that provides a collection of Internet video content, including professionally-produced content licensed from professional content providers and self-produced content. The company also offers affiliate services, content distribution, and online advertising.

Through its premium content, it attracts a massive user base with huge engagement. The total number of subscribed members was 105.3 million as of March 31, 2021, and 104.3 million, excluding individuals with trial memberships. iQIYI had 3.6 million more subscribed members in the first quarter, and its membership services revenue grew by 12% compared to the previous quarter.

Is iQIYI undervalued?

The analysts' 12-month average price for IQIYI is $19.42, 80% above the current level. IQ stock is significantly undervalued, around 45% relative to our estimate of its Fair Value price.

IQIYI generates revenues through membership services, online advertising services and a suite of other monetization methods. Total revenues were RMB8.0 billion (US$1.2 billion), representing a 4% increase, from the same period in 2020. IQ's revenue has grown faster than the US Internet Content & Information industry average. IQIYI´s Revenue is expected to grow by 11.13% on average over the next 5 years. This is quite good.

Technical analysis

On July 27, iQIYI Inc (Symbol: IQ) entered oversold territory, reaching an RSI reading of 17.48, and the share price fell across the 50 SMA to $10.33 per share (25-week low). A bullish investor could look for entry opportunities after a possible retest of the low. In the case of a positive earnings report, the share price could recover up to 50%.