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Why iQIYI Stock Rose 16% in February

By Demitri Kalogeropoulos - Mar 4, 2021 at 9:22AM

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Investors shrugged off a fourth-quarter subscriber decline to focus on a potential growth rebound ahead.

What happened

iQIYI (IQ 0.98%) shareholders outperformed a rising market last month. Shares rose 16% in February compared to a 2.6% gain in the S&P 500, according to data provided by S&P Global Market Intelligence.

The boost kept the volatile stock in positive territory, but shares are still trailing the market since last March.

A couple watch TV together.

Image source: Getty Images.

So what

The Chinese streaming video platform reported fourth-quarter results last month that showed a few challenges to its growth model. While global streaming giants like Netflix saw strong growth, iQIYI reported its second straight quarter of declining sales as subscriber numbers fell.

Now what

Management is predicting a third consecutive quarterly subscriber drop to start fiscal 2021 due to challenging conditions in the Chinese market. The business could rebound in the following quarters, especially as content production scales back up. CEO Yu Gong told investors the scarcity of new content played a big role in depressing user engagement in late 2020. That trend should improve, Gong said, as vaccine distribution widens through the rest of the year.

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Stocks Mentioned

iQIYI, Inc. Stock Quote
iQIYI, Inc.
IQ
$4.11 (0.98%) $0.04
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