Shares of iQIYI (NASDAQ:IQ) slumped on Tuesday after the Chinese streaming company reported its third-quarter results. While iQIYI beat analyst estimates across the board, a decline in subscribers and weak guidance sent the stock down 15.4% by 11:45 a.m. EST.
iQIYI reported third-quarter revenue of $1.1 billion down 3% year over year and $20 million higher than the average analyst estimate. Earnings per American depositary share came in at a loss of $0.24; analysts were expecting the per-share loss to be $0.17 bigger.
Membership services revenue was up 7% to $585.5 million, but online advertising service revenue slumped 11% to $271 million, and content distribution revenue plunged 42% to $57.8 million. The company had 104.8 million subscriber members at the end of the quarter, down from 105.8 million one year ago.
"In the coming quarters, we may continue to see fluctuations in the number of subscribers, driven by the normalization of user behavior and content pipeline," said iQIYI CEO Yu Gong.
For the fourth quarter, iQIYI expects to generate revenue between $1.07 billion and $1.14 billion. That guidance range represents a year-over-year change between negative 3% and positive 3%.
iQIYI has a lofty valuation: The company was valued at nearly five times sales prior to Tuesday's plunge. With revenue not growing, and with the bottom line in the red, investors were reevaluating whether the stock deserves such a premium valuation on Tuesday.