iQiyi has been one of top performing stock in recent months. It has increased its value by more than 200% since they went public for $14. It is the largest Chinese IPO after Alibaba. People call it “Chinese Netflix”, although it is perhaps more like Hulu.
In any case, the company has certainly great potential in long-term. Early investors should definitely hold this.
iQiyi, Inc. (IQ)
I’ve been asked by several trend followers, swing traders and speculators about the short and medium-term game to play now. Well, this game is not going to be easy to play. The best would be maybe to learn about a straddle option in case the stock becomes volatile after its peak.
iQiyi revenue will depend on the subscribers, so changes in subscriptions will move the share price faster than earnings releases. Then, the company will need to do their management magic of customer acquisition to overall capital.
The capital structure is not that convincing when looking at debt ratios.
- Debt to Total Capital: 7.21
- Debt to Total Assets: 3.18
- Long-Term Debt to Total Capital: 3.18
However, when the company uses its borrowed money effectively, the future gain may be incredible. One way, or another, the psychology of the market is driven by news, masses and trading robots that will inflict fluctuations to the stock – especially in a revenue recurring business that became very popular in recent years.
There’s not much to analyze yet. iQiyi chart is still a toddler. We can see an obvious breakout and run up. The most interesting fact is a super increased trading volume with negative close in a particular trading day. This is a sign of heavy profit taking of early traders. Speculators start to realize that too much heat has come on this stock and it may be a time for a pause. The RSI shows extremely overbought levels and starts to slope down a bit. Thus, if you don’t plan to hold this long-term, it is perhaps not the best time to go LONG on this at the moment. A consolidation towards 20 EMA is highly expected before another swing UP!
iQiyi represents a great concept of business with a nice potential of earning $$$ in a rapidly growing Chinese market.
Stay disciplined and focused on the big picture!
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