What happened

China-based streaming video giant iQiyi (NASDAQ:IQ) outperformed a strong market last month as the stock rose 13% compared to a 7% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally reversed much of the past month's decline to keep shares well ahead of the market, up 40% so far in 2019.

A couple watching TV.

Image source: Getty Images.

So what

iQiyi didn't post any operating updates last month, and so investors mostly took the time to digest its late-May earnings announcement that paired strong subscriber growth with lackluster advertising revenue. The stock's surge last month also appeared to be fueled by shifting expectations around Chinese stocks in general.

Now what

iQiyi shareholders can expect further volatility in concert with changes in investor sentiment toward Chinese stocks. But long-term returns will depend on whether the company can keep its prime position in the competitive Chinese streaming video market and eventually extend that reach into new geographies. Its early membership and content leads support that bullish reading, but investors will likely have to stomach significant stock price swings -- in both directions -- even if iQiyi continues outperforming expectations.