10 Worst Chinese Stocks to Buy Right Now According to Short Sellers

7) iQIYI, Inc. (NASDAQ:IQ)

Short % of Float (8/30/2024): 10.85%

Number of Hedge Fund Holders: 17

iQIYI, Inc. (NASDAQ:IQ) provides video entertainment services. It offers movies, television dramas, variety shows, and other video content.

As of 30^th August 2024, its short percentage of float stood at ~10.85%, with short sellers expecting that the company will continue to see headwinds related to its customer growth. Its recent efforts to bolster the content library, both in terms of quantity and quality, demonstrated brief signs of success, but they have not translated to long-term growth. Therefore, iQIYI, Inc. (NASDAQ:IQ) might encounter challenges related to membership growth. Also, the company might see competitive pressures not only from streaming platforms but also from short video and live-streaming mediums. Collectively, these factors continue to raise margin and profitability concerns.

On the other hand, Wall Street analysts believe that iQIYI, Inc. (NASDAQ:IQ) should be able to maintain profitability over the near term as a result of expectations of lower content costs, which are now ~50%-60% of sales. With a focus on innovation and user experience, iQIYI, Inc. (NASDAQ:IQ) continues to implement numerous strategies to beat its competition and tap new market opportunities. The company has been focusing on content diversification in a bid to cater diverse preferences of the audience.

Apart from attracting new users, this should also help in retaining the existing ones. It will translate to increased user engagement and loyalty. Therefore, the company’s extensive content library, advanced technology (such as AI-driven recommendations), and expectations of higher user engagement are expected to act as critical tailwinds, which should help in revenue and earnings growth.

As per Wall Street analysts, the shares of iQIYI, Inc. (NASDAQ:IQ) have an average price target of $3.59. Insider Monkey’s 2Q 2024 revealed that iQIYI, Inc. (NASDAQ:IQ) was in the portfolios of 17 hedge funds.