iQiyi (IQ 0.25%) investors have been on a thrill ride since the Chinese streaming giant went public early last year. After soaring more than 150% in just over two months after its debut, the stock then plunged to below its $18 IPO price, where it has remained ever since.

Investors have grown concerned about the company's mounting losses and slowing revenue growth as China's economy struggles, partially the result of the ongoing trade war with the United States.

Let's look at some of the highlights of iQiyi's second-quarter results to see how the company fared in the wake of all this pessimism.

Gong Yu Founder and CEO of iQiyi.

Gong Yu, founder and CEO of iQiyi, speaking at the Beijing International Film Festival. Image source: iQiyi.

1. Revenue speed bumps

iQiyi reported revenue that reached 7.1 billion yuan ($1 billion), up 15% from the prior-year quarter. The performance was near the midpoint of management's forecast range of 6.91 billion and 7.29 billion yuan and slightly below analysts' consensus estimates of $1.02 billion. It was also a far cry from the 51% growth the company generated in the year-ago quarter. 

The contributions from its operating segments yielded a few surprises. While membership revenue increased 38% year over year, sales of online advertising fell 16%. Management placed the blame squarely on the economy and the trade war, saying "the decline was mainly due to the challenging macroeconomic environment in China."

Content distribution revenue of 518 yuan ($75 million) eked out gains of 4% in comparison with the prior-year quarter, while other revenue of 979 yuan ($143 million) marked 82% year-over-year growth. The highlight of the other revenue segment was growth in iQiyi's gaming business following its acquisition of game publisher Skymoons last year.

2. Heavy spending on content

Much in the vein of its American cousin Netflix (NFLX -0.97%), iQiyi continues to spend heavily on programming. "We continue to invest in building our comprehensive and diversified content library," the company said in its earnings press release.

Cost of revenue amounted to 7 billion yuan ($1 billion), up 14% year over year -- almost equal to the total revenue generated for the quarter. Of that, content costs of 5 billion yuan ($732 million) grew 7% over the prior-year quarter.

It's important to note that the costs of film and television production are coming back in line with historical averages. Chinese officials launched an investigation last year into tax evasion in the entertainment industry that resulted in regulations that "capped actors' salaries at 40% of total production costs," according to the South China Morning Post. This move helped reverse spiraling talent costs across the industry. 

a rap battle between KeyNG and Fox, two popular contestants from The Rap of China 2019.

A rap battle between KeyNG and Fox, two popular contestants from The Rap of China 2019. Image source: iQiyi. 

3. Mounting losses

iQiyi reported a net loss of 2.3 billion yuan ($339 million), about 10% worse than the 2.1 billion yuan lost in the prior-year quarter. That resulted in a loss per share of $0.49, compared with a loss per share of $0.45 in the year-ago quarter.

As the company continues to invest in expanding its library of content, investors should expect iQiyi to continue generating additional losses -- at least for the foreseeable future.

4. A soaring subscriber base

The Chinese streaming giant reported that its subscriber count grew to 100.5 million, up 50% year over year, saying that 98.9% are paying members. To put that into perspective, Netflix has a worldwide subscriber count of just over 151 million. 

iQiyi's growth figures are supported by a recent survey by global app analytics and data platform App Annie. The iQiyi app was named the No. 4 on the list of the world's most popular mobile apps for July 2019. The app was also ranked No. 1 in China for online video apps by revenue in Apple's iOS App Store. 

5. More of the same ahead

For the upcoming third quarter, iQiyi management expects net revenue in a range of 7.21 billion and 7.63 billion yuan (between $1.03 billion and $1.09 billion at current exchange rates), which would represent an increase of between 4% and 10% year over year. The company doesn't provide earnings-per-share estimates. 

To put that into the context of Wall Street expectations, analysts' consensus estimates are calling for revenue of $1.11 billion and a loss per share of $0.57. 

Investors who have followed the streaming industry for any length of time will recognize iQiyi's strategy as similar to the one Netflix successfully employed to become a streaming powerhouse. There's little doubt the company will continue to spend heavily on content for years to come.