iQIYI, Inc. ( $iQiyi Inc.(IQ)$ , HOLD)1Q25 Preview and Model Updates;
Source: US Tiger Securities Research
We are maintaining our HOLD rating but decreasing PT to $2 (was $2.5) as we fine-tune our estimates ahead of 1Q earnings.
Our 1Q membership revenue estimate remains largely unchanged. However, we are lowering our advertising revenue estimate by 7%, reflecting softer-than-expected brand advertising demand. Conversely, we are raising revenue estimates for content distribution and "Other" segments, as some content was pulled forward into 1Q, and one of the company’s mobile games showed notable strength during the quarter. As a result, our total revenue estimate remains broadly unchanged.
Source: US Tiger Securities Research
Source: US Tiger Securities Research
Source: US Tiger Securities Research
On the cost side, we are increasing our operating expense estimate, primarily due to higher sales and marketing spend related to the promotion of IQ's ultra-short series and the aforementioned mobile game. Consequently, we are lowering our 1Q non-GAAP EBIT estimate by 26% to RMB 446 million.
Valuation: Our $2 (was $2.5) price target is based on 8.6x '25E EBITDA of $368M. While 8.6x is lower than NFLX's current '25E EV/EBITDA multiple of 34.4x, we believe the discount is justified by 1) a slower expected '23-'25E revenue CAGR (IQ's -3% vs. NFLX's 9%); 2) uncertainties in revenue growth due to lower content quality consistency and content regulations in China; and 3) country risk.
Open a CBA today and enjoy access to a trading limit of up to SGD 20,000 with upcoming 0-commission, unlimited trading on SG, HK, and US stocks, as well as ETFs. Find out more here.
Other helpful links:
Comments