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iQiyi Continues to Grow, but Its Losses Have Expanded

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May. 21 2019, Published 2:13 p.m. ET

iQiyi continues to see robust revenue growth, but its losses are expanding

Chinese video-streaming company iQiyi (IQ) spun off from Baidu (BIDU) through a blockbuster $1.5 billion IPO in the United States last year. Baidu’s revenue growth has been slowing, and iQiyi has been the main driver of its growth, as it still owns a stake in the company.

The Chinese streaming giant’s revenue rose 43% YoY (year-over-year) to 7.0 billion Chinese yuan ($1.04 billion) in the first quarter. Like Netflix, iQiyi has continued to spend aggressively on growing its content library. Baidu posted a loss in the first quarter partly due to increasing content costs. However, unlike Netflix, iQiyi has both ad-supported and subscription-based models.

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iQiyi’s subscriber base is surging

Baidu’s content costs (mostly attributable to iQiyi) climbed 47% in the first quarter to $917 million. iQiyi said it lost a whopping 1.8 billion yuan ($268 million) in the first quarter compared to its loss of 395.7 million yuan ($59.1 million) in the same quarter last year.

However, iQiyi’s subscriber count continues to soar. At the end of the first quarter, iQiyi’s subscriber count had risen to 96.8 million from 61.3 million in the previous year’s quarter, a 58% YoY jump.

Despite its robust growth, iQiyi stock has plunged ~10% since it announced its earnings results, probably due to its expanding losses. The stock is down over 40% since last June after the initial surge following its IPO last March.

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