One-glance verdict
Undervalued
$9.45 our estimate vs market $1.01
Wall Street consensus: $1.40 (-85.1% lower than our fair-value estimate)
89% below our estimate, below the bear case
Fundamentals snapshot
iQIYI, Inc.
IQ · NMS · Communication Services · Entertainment
Current price
$1.01
52-week range
$0.86 - $2.72
Market cap
$974.67M
Balance sheet
Distressed
0.25x Concerning
Net debt $1.49B. Interest coverage shows how many times profit covers the interest bill.
What stands out
1 Reward
3 Risks
1 rewards · 3 risks
- Reward Free cash flow was positive in 5/10 years.
- Risk Return on equity was -6.7% last year — the company lost money on shareholders' equity.
- Risk Operating margin compressed from 4.5% to -1.7% over 3 years.
- Risk Insider ownership is only 0.3% (peer median: 5.2%).
What this company does
iQIYI, Inc.
iQIYI is a major video streaming service in China, much like Netflix, that offers a large library of TV shows and movies. The company's main revenue (the money it earns from its business) comes from people paying for monthly subscriptions and from selling advertising on its service. As a subsidiary (a company controlled by a parent company) of Chinese tech giant Baidu, iQIYI has significant resources to produce its own popular shows to attract and keep viewers.
How the company got here
Founded in 2010 by the Chinese tech giant Baidu, iQIYI (pronounced 'eye-CHEE-yee') started as an online video platform in a crowded market. It survived intense competition by acquiring the rights to popular shows and by being a pioneer in shifting to a paid subscription model in a country where free, pirated content was common. The company went public on the U.S. stock market in 2018, raising $2.25 billion. After years of focusing on rapid growth, iQIYI has recently shifted its strategy to prioritize profitability and efficiency, a move that has started to pay off.
What it actually does
Think of iQIYI as China's version of Netflix or Hulu. It's a streaming service where millions of people watch a huge library of TV shows, movies, cartoons, and variety shows on their phones, computers, and smart TVs. The company both licenses content from others and produces its own original shows and films, some of which have become massive hits in China. Beyond just streaming, iQIYI is expanding into a broader entertainment company, creating things like mobile games, merchandise, and even theme parks based on its popular shows.
Membership Services
This is iQIYI's largest and most important business, making up the majority of its revenue. It works just like a Netflix or Disney+ subscription, where users pay a recurring fee for access to premium content. These paying members get special perks like watching videos without ads, getting early access to new episodes of popular dramas, and viewing content in higher quality. The company's success in this area depends heavily on having a steady stream of hit shows that attract new subscribers and keep current ones from canceling.
Online Advertising Services
For users who don't pay for a membership, iQIYI shows them ads, similar to how YouTube or broadcast television works. This is the company's second-largest source of income. Advertisers pay iQIYI to place commercials before, during, or around the video content. The amount of money iQIYI makes from advertising is tied to how many people are watching the free content and the general health of the economy, which affects how much companies are willing to spend on ads.
Content Distribution
This part of the business involves selling the rights to its shows and movies to other companies. For example, iQIYI might license one of its original hit dramas to a TV network in another country or to another streaming service. This creates an additional revenue stream (a source of income) from the content it has already produced or acquired. It's a way for the company to make more money from its popular shows beyond its own platform.
Other
This is a collection of iQIYI's smaller but growing businesses that go beyond streaming video. This segment includes revenue from online games, a talent agency that manages artists, and IP licensing (selling the rights to use its show characters and stories on other products). A key new area is its 'Experience Business,' which creates real-world attractions like immersive theaters and even 'iQIYI Land' theme parks based on its popular shows and characters. This strategy aims to turn popular on-screen content into a wider entertainment ecosystem.
What management is betting on now
Management's biggest bet is on Artificial Intelligence (AI) to revolutionize how content is made and recommended to users. The company is heavily investing in AI tools to help with everything from script analysis to production, aiming to lower costs and increase efficiency. Another major focus is expanding its IP (Intellectual Property) monetization, which means finding more ways to make money from its hit shows, like developing merchandise, games, and offline theme parks. Finally, iQIYI is pushing for international growth, particularly in Southeast Asia and Latin America, to find new subscribers outside of the competitive Chinese market.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$278.21M
FY2025 Q4
$1.43M
Revenue
$3.90B
Net income
$-29.50M
Diluted EPS
—
Operating cash flow
$15.13M
Free cash flow
$1.43M
Fetching…
Sources
Revenue
$4.00B
Net income
$104.68M
Diluted EPS
—
Operating cash flow
$289.07M
Free cash flow
$278.21M
Fetching…
Sources
Is it cheap or expensive?
Fair value $9.45 vs current price $1.01
Wall Street consensus is the average analyst price target: $1.40 (-85.1% lower than our fair-value estimate).
Our most-likely fair value is $9.45 a share — about 835.8% above today's price of $1.01, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Distressed
Net debt $1.5B. Interest coverage 0.3x.
Net debt
$1.49B
Interest coverage
0.25x
iQIYI, Inc.'s profit covers its interest bill about 0.3 times over. which is stronger than most peers shown here and 3 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Distressed
Worse cushion
Baseline
Better cushion
IQ
BASELINE
iQIYI, Inc.
Total debt $2.11B Interest coverage 0.25x This is the baseline the peer rows are being compared against.
Total debt $3.42M Interest coverage -0.85x -100% vs IQ This peer has almost no interest-payment cushion compared with IQ.
Total debt $1.75B Interest coverage 1.49x +493% vs IQ Carries about 5.9x more debt cushion than IQ.
Total debt $402.74M Interest coverage -9.22x -100% vs IQ This peer has almost no interest-payment cushion compared with IQ.
Total debt $3.68M Interest coverage -7.43x -100% vs IQ This peer has almost no interest-payment cushion compared with IQ.
What you should know
The case for and against IQ
1 Reward
3 Risks
Rewards
-
Free cash flow was positive in 5/10 years.
Risks
-
Return on equity was -6.7% last year — the company lost money on shareholders' equity.
-
Operating margin compressed from 4.5% to -1.7% over 3 years.
-
Insider ownership is only 0.3% (peer median: 5.2%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
—
Forward P/E
12.19x
P/B
0.49x
P/S
0.04x
EV/EBITDA
2.07x
PEG ratio
2.48x
Profitability
How much profit each dollar creates
Gross margin
17.9%
Operating margin
-1.7%
Net margin
-3.2%
ROE
-6.7%
ROA
-0.5%
Health
Liquidity and balance-sheet strength
Debt / equity
1.12x
Current ratio
0.45x
Quick ratio
0.32x
Total debt
$2.11B
Total cash
$615.87M
Growth
How the business has been compounding
Revenue TTM
$16.60B
Revenue 5Y CAGR
-5.0%
EPS TTM
-0.14
EPS 5Y CAGR
—
Cash flow
How much cash the business throws off
Operating CF TTM
$766.04M
Free CF TTM
$1.43M
FCF margin
0.0%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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