China-based streaming company iQIYI’s (IQ) momentum has been unimpressive this year. Furthermore, its shares retreated after the company posted a disappointing earnings report and bleak revenue guidance. The company expects uncertainty related to content scheduling in the coming months, which could further hamper its growth. Also, considering its negative ROE, is the stock worth buying now? Keep reading to learn our view.Beijing, China-based iQIYI, Inc. (IQ) provides online entertainment services under the iQIYI brand in the People’s Republic of China. Shares of the streaming company have declined 70.5% in price over the past year and 71.3% year-to-date to close yesterday’s trading session at $5.01. Over the past month, the stock has slumped 24.7%. It is currently trading below its 50-day and 200-day moving averages, near its 52-week low of $4.23, which it hit on December 15.
IQ posted an unimpressive report in its most recent quarter and bleak guidance, which caused its shares to retreat. IQ expects its total net revenues to be within RMB7.08 billion ($1.10 billion) and RMB7.53 billion ($1.17 billion) in its fiscal fourth quarter, representing a 5% decrease to 1% increase year over year.
“We experienced significant uncertainty in terms of content scheduling, which resulted in softer than expected top-line performance,” explained Yu Gong, Founder, Director, and Chief Executive Officer of iQIYI. Its online advertising services revenue came in at RMB1.70 billion ($257.70 million), reflecting a 10% decrease year-over-year. IQ cited less premium content launched during the quarter and a challenging macroeconomic environment in China as responsible for the decline. The company expects the uncertainty related to content scheduling to remain in the coming months.