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Why iQiyi Stock Was Winning This Week

By Eric Volkman – Oct 22, 2021 at 4:50PM

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Investors are taking that old adage "content is king" to heart with the productive video-streaming company.

What happened

iQiyi (IQ -1.85%), a China-based purveyor of streaming video, saw its stock rise in the low-double digits across the span of this week. As of late afternoon trading Friday, the shares had risen by just over 10% week-to-date, thanks in large part to significant content news from the company.

So what

iQiyi clearly isn't letting the Chinese government's clampdown on certain business sectors -- particularly tech -- stop it from pushing forward. At the end of last week, the company announced the release of no less than 260 new movies and TV shows.

A young person in protective mask using a smartphone.

Image source: Getty Images.

Yes, that's a large number. However, China is a massive country, and much of its population has access to streaming video. Additionally, iQiyi was not shy to point out that it has established more than 70 content studios and partnerships with a host of content creators prominent in the domestic entertainment industry.

iQiyi specifically targets a hot demographic. As it wrote in a press release trumpeting the mountain of new content, it aims to "inspire young people today by keeping an authentic record of lives as lived by them."

Rather immodestly, it adds that by doing so, it "became a trend setter of popular culture in China."

Now what

Judging by iQiyi's stock price jump in the days following the conference and announcement, investors are pleased that the company continues to serve its audience.

They don't seem to be buying the arguments of certain analysts who recently became more bearish on the tech stock. One is HSBC prognosticator Charlotte Wei, who on Tuesday cut her price target on the stock from $8.80 per share to $8.20 while maintaining a hold recommendation.

Another was Citigroup's Alicia Yap. On Wednesday, she sliced her price target from $16 to $10 per share while downgrading her recommendation from buy to neutral. In her view, iQiyi faces "multiple regulatory headwinds," in addition to other negative factors such as a market-wide drop in ad spending.

HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends HSBC Holdings and iQiyi. The Motley Fool has a disclosure policy.

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