Iqiyi’s Hold Rating: Balancing Content Strategy Challenges and Cost Optimization

Benchmark Co. analyst Fawne Jiang has maintained their neutral stance on IQ stock, giving a Hold rating yesterday.

Fawne Jiang has given his Hold rating due to a combination of factors impacting Iqiyi’s current performance and future outlook. The company’s second-quarter results were less impressive than anticipated, mainly due to lower-than-expected viewership of certain premium content and delays in content releases, which adversely affected both subscription and content distribution revenues. Additionally, the shorter planning periods for variety shows have hindered advertisers’ ability to effectively launch campaigns, resulting in weaker advertising growth.
Looking forward, Jiang emphasizes the importance of monitoring the quality and timing of Iqiyi’s content pipeline, as these will be crucial for subscriber trends and revenue dynamics. The company’s efforts in cost management are noted positively, but there remains a need for greater clarity on free cash flow generation and growth. The Hold rating reflects a cautious stance, balancing the potential for improvement in content strategy and cost optimization against the current challenges in revenue growth and subscriber engagement.

In another report released yesterday, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $2.00 price target.