What happened

Shares of iQIYI (NASDAQ:IQ) gained 35.3% in January, according to data from S&P Global Market Intelligence. There wasn't much in the way of company-specific news in the month, but shares rebounded from the big sell-offs that closed out 2018 as overall market sentiment became more positive.

IQ Chart

IQ data by YCharts.

Last year's final quarter saw the market trudge into bearish territory, and growth-dependent Chinese tech stocks were hit particularly hard. Most of iQiyi's big January stock gains were tied to a rebound from big sell-offs at the end of 2018.

Numerous video screens.

Image source: Getty Images.

So what

The Invesco China Technology ETF, which combines 70 different tech stocks from the country into a fund, rose roughly 14% in January -- evidencing strong momentum in the sector. The fund lost roughly 18% of its value from October to December, and iQiyi stock fell roughly 45% over that stretch, so it's not surprising to see that the streaming video stock posted a big comeback as investors poured back into Chinese tech stocks. 

Now what

iQiyi could have a long runway for growth as the Chinese entertainment and streaming video industries continue to grow, but the pace at which its losses have accelerated across its first three quarters as a public company highlights the stock's high-risk, high-reward dynamic. The company counted roughly 81 million paying members at the end of September, up from roughly 50 million subscribers at the start of 2018 and just 5 million subscribers in May 2015, but the bullish thesis involves trusting that the company will be able to leverage its large and fast-growing user base to deliver consistent profits at some point. 

The company is scheduled to report its fourth-quarter and full-year results after market close on Feb. 21. Management is guiding for sales to come in between $943.5 million and $982.8 million -- representing 46% year over year sales growth at the midpoint of its target.

Keith Noonan owns shares of iQiyi. The Motley Fool recommends iQiyi. The Motley Fool has a disclosure policy.