What happened

Shares of iQIYI (NASDAQ:IQ) soared as much as 22.8% higher on Friday, reaching that peak just after 1 p.m. EST. The China-based online entertainment specialist reported fourth-quarter results after the closing bell on Thursday, edging out Wall Street's consensus estimates with a side order of rosy first-quarter guidance.

So what

iQIYI's revenue rose 55% year over year to $1.0 billion. On the bottom line, net losses grew nearly sixfold to land at $0.70 per American Depositary Share. Your average analyst would have settled for a net loss of $0.71 per share on sales near $983 million.

Looking ahead, management expects first-quarter revenue to land near $995 million. Here, the current analyst view stops at $973 million.

Young Chinese woman watching something on her smartphone, perched on a hilltop.

Image source: Getty Images.

Now what

The company served 87.4 million subscribers at the end of this quarter, 72% above the year-ago reading. Of these members, 98.5% were paying subscribers to iQIYI's premium services, leaving a minuscule 1.5% with its free or ad-supported options. According to CEO Yu Gong, Chinese consumers are getting used to the idea of paying up for higher-quality entertainment services online.

So it's no surprise to see iQIYI's shares surging on this solid report, especially since it also included optimistic interpretations of China's current consumer trends.