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iQIYI (NasdaqGS:IQ) is drawing attention after recent trading left the share price at US$1.97, with returns over the past month and past 3 months both in negative territory.
See our latest analysis for iQIYI.
That US$1.97 share price comes after a mixed stretch, with a small 1 day and 7 day share price gain sitting against a 30 day share price return of 3.9% decline and a 1 year total shareholder return of 14% decline. This points to fading momentum over a longer window.
If this kind of pressure on a single name has you widening your watchlist, it could be a good moment to scan our list of 23 top founder-led companies for fresh ideas beyond large, well known platforms.
With the share price under pressure over 1, 3 and 5 years, yet trading around a 20% discount to analyst targets and showing recent revenue and net income growth, is this a mispriced recovery story, or is the market already factoring in future growth?
At $1.97, iQIYI is trading below a widely followed fair value estimate of $2.34, and that gap rests on some very specific growth and margin assumptions.
Initiatives in IP based consumer products and offline “experience” businesses (theme parks and immersive centers) are opening new, scalable revenue streams beyond core streaming, enhancing overall monetization and potentially improving net margins as these asset light strategies mature.
Curious how a video platform fair value pushes above the current price? This narrative leans heavily on steadier revenue growth and a meaningful lift in profitability over the next few years. It also assumes the market will later accept a richer earnings multiple than today. The exact mix of revenue, margins and valuation is where the story gets interesting.
Result: Fair Value of $2.34 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, the narrative could easily crack if costly blockbuster content fails to land with viewers or if overseas expansion hits regulatory or competitive roadblocks.
Find out about the key risks to this iQIYI narrative.
The popular narrative has iQIYI at a fair value of $2.34 and looking 15.8% undervalued at $1.97. Our DCF model, however, points the other way, with a future cash flow value of $1.58, implying the shares are trading above this estimate. Which lens do you trust more: earnings or cash flows?
