1. iQIYI, Inc. (NASDAQ:IQ)
Share Price as of July 18: $3.65
Number of Hedge Fund Holders: 15
Our top stock pick in the list, iQIYI, Inc. (NASDAQ:IQ) offers online entertainment video services in China and internationally. The company’s product offerings include online video, online games, online literature, and more. Its services are offered through its main platform, as well as through a live broadcasting platform known as the iQIYI Show. As of 2024, iQIYI (NASDAQ:IQ) has a subscriber base of over 100 million and its online video platform has over 400 million monthly active users.
iQIYI (NASDAQ:IQ) is strategically expanding into international markets, with a specific focus on Southeast Asia and other Asian regions to drive future growth. In the recent quarter, the company reported strong revenue expansion. Membership revenue saw significant year-over-year and sequential increases, particularly with substantial growth, an 80% annual increase in markets such as Hong Kong and the UK. It highlights the company’s effective strategy in broadening its global presence.
The popularity of iQIYI ‘s (NASDAQ:IQ) original content among international audiences has been a major driver of this growth. Shows like Sword and Fairy have gained substantial viewership across various regions, ranking prominently in countries such as Thailand, Vietnam, and Indonesia. Similarly, the second season of Rampas Cintaku, an original Malaysian production, has significantly boosted traffic and membership revenues on the company’s Malaysian side. The success is evidence of iQIYI’s ability to utilize premium content and local partnerships to enhance global market reach and revenue growth.
Additionally, iQIYI (NASDAQ:IQ) has strengthened its position through strategic collaborations with telecommunications firms and tourism authorities in Hong Kong and Thailand. For example, the company’s drama series Lansdowne secured a prime slot on selected local TV stations in Thailand, which increased its brand visibility and viewer engagement. iQIYI’s (NASDAQ:IQ) management plans to maintain a steady pipeline of high-quality CPOP content to sustain and expand its presence in international markets.
Moreover, the company aims to accelerate the production of original content tailored specifically for local audiences, to deepen viewer engagement and loyalty. Management remains committed to promoting CPOP and local content through ongoing partnerships with Southeast Asian TV stations, which will reinforce its brand presence in key markets. Its approach will improve the company’s competitive edge and position it to capitalize on the growing demand for premium entertainment across Asia.
In the first quarter, 15 hedge funds held positions in iQIYI (NASDAQ:IQ) and their stakes amounted to $107.953 million. As of March 31, Maple Rock Capital is the most dominant shareholder in the company and has a position worth $43.65 million.
Ariel Global Fund made the following comment about IQIYI (NASDAQ:IQ) in its Q2 2023 investor letter:
“Lastly, we established a new position in IQIYI, Inc. (NASDAQ:IQ), a leading long form online video entertainment service in China. Despite facing recent obstacles, including competition from short-form content platforms, iQIYI boasts a devoted user base, robust partnerships with major content providers and an extensive collection of original and licensed content. Our confidence in this investment is further strengthened by iQIYI’s implementation of a proprietary industrialized production system. This technology leverages data-driven approaches to effectively manage content creation, allocate budgets, and monitor production progress, facilitating sustainable growth and informed decision-making.”
While we acknowledge the potential of iQIYI, Inc. (NASDAQ:IQ) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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