7 Cheap Chinese Penny Stocks to Buy According to Hedge Funds

02. iQIYI, Inc. (NASDAQ:IQ)

Number of Hedge Fund Holders: 17

iQIYI, Inc. (NASDAQ:IQ), a leading player in China’s video streaming market, presents an intriguing investment opportunity despite recent mixed signals. The company’s strategic adjustments and focus on long-term growth underscore its potential for future gains. Although iQIYI, Inc. (NASDAQ:IQ) Q1 2024 revenue saw a decline of 5% year-over-year, the company’s shift in strategy towards long-term membership revenue is a positive development. By prioritizing higher-value, loyal subscribers over short-term metrics like subscriber count and Average Revenue Per Member (ARM), iQIYI, Inc. (NASDAQ:IQ) is positioning itself to enhance its revenue sustainability in the long run. This approach is expected to attract more dedicated subscribers and potentially boost revenue quality.

Additionally, iQIYI, Inc. (NASDAQ:IQ) operating margin of 11.9% in Q1 2024 exceeded market expectations, highlighting the effectiveness of its cost management strategies. The company’s commitment to optimizing marketing expenses and reducing content costs through AI integration demonstrates its proactive approach to enhancing profitability. This focus on operational efficiency is likely to yield further improvements in profit margins, driving overall financial performance.

Despite facing competition from rapidly growing short-form video platforms, iQIYI, Inc. (NASDAQ:IQ) strategic investments in content and technology are poised to strengthen its market position. The company’s ability to adapt and innovate, coupled with its disciplined approach to cost control, sets the stage for continued profitability growth. iQIYI, Inc. (NASDAQ:IQ) current challenges are outweighed by its strategic focus on long-term revenue growth and operational improvements. The stock’s valuation, with a P/E ratio of 8.6, appears attractive given the company’s potential for future profitability gains.

The number of hedge funds in Insider Monkey’s database owning stakes in iQIYI, Inc. (NASDAQ:IQ) grew to 17 in Q2 2024, as compared to 15 in the preceding quarter. The consolidated value of these stakes is nearly $148.21 million. Among these hedge funds, Thomas Steyer’s Farallon Capital was the company’s leading stakeholder in Q2.