It is usually the case that even with the most bullish of stocks and where market sentiment is high, the announcement of results that are in line with expectations can have a negative impression on the share price.
This has been the case with streaming giant iQIYI shares even though the company’s main headline numbers at the Q3 stage matched analysts expectations. Consequently, the iQIYI share price has declined from post 2019 highs near $28, back to the $22 zone.
Fortunately for the bulls the shares have retreated towards the area of the 200 day moving average at $21.50 and an uptrend line from May at $22. The prospects for the iQIYI share price is now that after the initial negative price action in the wake of the Q3 results, the overall positive performance of the company on a fundamental basis is likely to kick in.
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IQ shares pandemic rotation
One of the characteristics of the stock market since the pandemic began in March this year, has been the rotation by investors from value stocks to high growth and momentum plays. The major beneficiaries have of course been stocks in the tech space, with iQIYI one of the leaders in this respect. However, judging by the latest results, even here there is the shadow of COVID-19.
Streaming space growth for IQ shares
For instance, online advertising revenue fell by 11% and content distribution revenue down 42%. Nevertheless, the setbacks were largely in the more minor income streams, and clearly within the streaming space which is growing rapidly.
Therefore investors did not have much more to grapple with than the headline number of subscriber numbers down from 105.8 million to 104.8 million. This was the trigger for the post announcement IQ share price decline, although the question is whether it was justified or not?
IQIYI share price premium rating
As far as the near term it could be that iQIYI shares have to run in order to stand still fundamentally. This point was underlined by comments from the company suggesting that revenues would be flat as compared to last year, standing around $1.1bn. This, along with a lack of visibility in terms of what the fresh growth drivers may be could make it difficult for bulls of the stock to gain traction. Given the premium rating the shares have, it may have to wait until a market beating Q4 update is unveiled that a push for the stock to fresh 2 years highs may be possible.
How to trade iQIYI shares
Open a live or demo account with ATFX to get started today. Trade shares on leverage, take up a long or short position when trading with CFDs and make potential gains from price movements.
1. Register for an account or log in to your existing account
2. Open MT4 either on your desktop or mobile
3. Search for iQIYI shares in the market watch or symbols window
4. Choose your position size
5. Hit buy or sell, and then confirm the trade
Mist Theater popularity
Perhaps the key to what happens next as far as the iQIYI share price is the overall state of the Chinese streaming market. Analysts have suggested that the space has not grown as much as expected over the past couple of years, but is expected to re-rate positively from now. If this proves to be the case, initiatives that iQIYI have made this year such as its hit Mist Theater, could prove to be growth leaders. Indeed, so far this content library of short suspense thrillers comprising five dramas has already generated 68 million subscribers, and proved to be the TikTok of its space in terms of popularity.
IQ share price daily chart
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