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Why iQiyi Stock Is Up 13% Today

By Demitri Kalogeropoulos - Oct 19, 2021 at 11:15AM

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The stock recovered a small piece of the recent losses shareholders have seen.

What happened

iQiyi ( IQ -15.74% ) shareholders beat the market on Tuesday, with the stock rising 13% by 11 a.m. EDT. The China-based streaming video specialist appeared to be benefiting from an optimistic outlook by a Wall Street investment firm.

A woman watches TV on her laptop.

Image source: Getty Images.

So what

An analyst at Citigroup on Monday issued an updated growth outlook for the business that sees the stock landing at roughly $10 per share over the next year.

Yes, that target was a downgrade from the firm's prior forecast. But it also represented a double-digit percentage increase compared to iQiyi's trading price as of Monday afternoon.

The stock has declined sharply since late March thanks to concerns around slowing growth, the regulatory climate in China, and a tougher digital advertising market. In that environment, even modestly positive comments about the business could push the beaten-down shares higher.

Now what

iQiyi's current outlook calls for sales to rise by between 6% and 12% in the fiscal third quarter. That earnings announcement typically arrives in mid-November and will be closely watched by investors for signs of further deterioration in the tech business.

Executives said back in August that a faster pace of content releases in the second half of 2021 would be critical to winning back the sales growth momentum that iQiyi had seen back in 2020. We'll find out soon whether that bullish outlook played out in the third quarter.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

iQIYI, Inc. Stock Quote
iQIYI, Inc.
IQ
$4.71 (-15.74%) $0.88
Citigroup Inc. Stock Quote
Citigroup Inc.
C
$62.76 (-1.65%) $-1.05

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