IQ Should I Buy
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iQIYI Inc (IQ) is not a strong buy at the moment for a beginner investor with a long-term strategy. The company is facing declining financial performance, bearish technical indicators, and lacks significant positive catalysts. While options data shows a slightly bullish sentiment, the overall outlook does not align with a strong long-term growth opportunity.
The technical indicators are bearish. The MACD is negatively expanding, the RSI is neutral at 21.839, and the moving averages indicate a bearish trend (SMA_200 > SMA_20 > SMA_5). The stock is trading near its support level of 1.808, with resistance at 2.075. Pre-market price is down 0.55%, showing continued weakness.
The opening of iQIYI LAND, its first offline theme park, could potentially drive brand recognition and future revenue. Analysts expect Q4 revenue to return to growth year-over-year and quarter-over-quarter due to an improved pipeline.
Gross margin also dropped by 17.39% YoY. Additionally, the firm faces higher content costs and operating expenses, which are expected to weigh on margins. Convertible senior notes repurchase obligations could strain liquidity.
In Q3 2025, revenue dropped to 6.68 billion CNY (-7.77% YoY), net income fell to -248.93 million CNY (-208.51% YoY), and EPS declined to -0.04 (-233.33% YoY). Gross margin dropped to 18.19% (-17.39% YoY). Overall, the company is struggling with declining financial performance.
Morgan Stanley recently lowered the price target from $2.30 to $2.10, maintaining an Equal Weight rating. Analysts expect Q4 revenue growth but caution about higher costs and weaker margins.
