iQIYI trending lower ahead of earnings next week
I have written about Chinese firm iQIYI (Nasdaq: IQ) before. I wrote about the online video platform back at the beginning of July when the stock was trading up near the $22 level and I was concerned about a fall in the stock price at that time. Here it is a few months later and I am getting a bearish signal on the stock once again.
While the signal in July and the current signal are based on technical factors, they are backed by the poor fundamentals of the company. iQIYI went public on March 28, 2018 and it has yet to turn a profit—it has lost money in every single quarter. Sales have been increasing, but earnings have yet to reach positive territory and they are expected to be worse for the third quarter of 2019 than they were in the third quarter of 2018. The company reported a loss of $0.63 last year and analysts expect a loss of $0.72 per share when the company reports on November 6.
Sales have increased by 52% per year over the last three years, but they only increased by 11% in the second quarter. Despite the sales growth, earnings declined by 4% in the second quarter. This is a major concern in my opinion. When a young company continues to grow sales, but can't grow earnings, I immediately become worried about the management efficiency. When you combine the sales growth with the profit margin and the return on equity, you get the SMR rating and iQIYI's SMR rating is awful.
The Tickeron SMR rating for this company is 100, indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The score of 100 is the worst possible score a stock can get.
The Tickeron Profit vs. Risk Rating for this company is 100, indicating that the returns do not compensate for the risks. IQ’s unstable profits reported over time resulted in significant drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating for the industry is 85, placing this stock worse than average. This rating is also the worst possible rating a stock can get.
The Tickeron Price Growth Rating for IQ is 83, indicating slightly worse than average price growth. The stock has grown at a lower rate over the last 12 months as compared to S&P 500 index constituents. A rating of 1 points to highest price growth (largest percent return) while a rating of 100 points to lowest price growth (smallest percent return).
Given this fundamental backdrop, it's hard to look at the stock with a bullish view and the chart doesn't really help matters. We see on the daily chart how the stock has been trending lower since February and now a downward sloped trend channel has formed. The stock didn't quite reach the upper rail of the channel, but with the stochastic readings being in overbought territory and making a bearish crossover, I don't think the stock will reach the upper rail this time around.
The Tickeron Trend Prediction Engine generated a bearish signal on iQIYI on October 28. The signal showed a confidence level of 69% and past predictions have been successful 72% of the time. The signal calls for a decline of at least 4% within the next month.
If there is a saving grace for iQIYI, it's the fact that the stock is not overly loved at this time. There are 22 analysts covering the stock at this time and only eight have the stock rated as a "buy". There are 12 "hold" ratings and two "sell" ratings. The overall buy percentage of 36.4% is well below average.
The short interest ratio is currently at 8.45 and that is much higher than average stock. Both the short interest ratio and the analysts' ratings are indicating there is extreme pessimism toward the stock at this time. Expectations seem to be pretty low for the stock, but given the chart and the fundamentals, the sentiment appears to be warranted.
IQ in upward trend: price expected to rise as it breaks its lower Bollinger Band on April 04, 2025
IQ may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options. In of 32 cases where IQ's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued upward trend are .
Technical Analysis (Indicators)
Bullish Trend Analysis
The RSI Indicator points to a transition from a downward trend to an upward trend -- in cases where IQ's RSI Oscillator exited the oversold zone, of 40 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for IQ just turned positive on April 23, 2025. Looking at past instances where IQ's MACD turned positive, the stock continued to rise in of 45 cases over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where IQ advanced for three days, in of 264 cases, the price rose further within the following month. The odds of a continued upward trend are .
Bearish Trend Analysis
The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In of 59 cases where IQ's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are .
The Momentum Indicator moved below the 0 level on May 09, 2025. You may want to consider selling the stock, shorting the stock, or exploring put options on IQ as a result. In of 91 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The 10-day moving average for IQ crossed bearishly below the 50-day moving average on April 02, 2025. This indicates that the trend has shifted lower and could be considered a sell signal. In of 15 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where IQ declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for IQ entered a downward trend on April 21, 2025. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating fairly steady price growth. IQ’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (2.432) is normal, around the industry mean (5.707). P/E Ratio (15.630) is within average values for comparable stocks, (92.419). Projected Growth (PEG Ratio) (0.132) is also within normal values, averaging (2.987). Dividend Yield (0.000) settles around the average of (0.040) among similar stocks. P/S Ratio (0.937) is also within normal values, averaging (30.155).
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. IQ’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 79, placing this stock worse than average.
Notable companies
Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
a provider of internet video streaming services
Industry MoviesEntertainment