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iQIYI (IQ) Set to Report Q3 Earnings: What's in the Cards?

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iQIYI (IQ - Free Report) is set to report third-quarter 2019 results on Nov 6.

For the quarter, the company expects total revenues between RMB7.21 billion ($1.03 billion) and RMB7.63 billion ($1.09 billion), suggesting a 4-10% year-over-year increase.

The Zacks Consensus Estimate for revenues is currently pegged at $1.04 billion, indicating growth of 1.9% from the figure reported in the year-ago quarter.

Moreover, the consensus mark for loss has widened 17 cents to 74 cents over the past 30 days. The company reported a loss of 63 cents in the year-ago quarter.

In the last reported quarter, the company reported a loss of 49 cents per ADS that was significantly narrower than the Zacks Consensus Estimate of a loss of 52 cents.

Total revenues grew 15% from the year-ago quarter to RMB7.1 billion.
 

iQIYI, Inc. Sponsored ADR Price and EPS Surprise

iQIYI, Inc. Sponsored ADR Price and EPS Surprise

iQIYI, Inc. Sponsored ADR price-eps-surprise | iQIYI, Inc. Sponsored ADR Quote

 

Let’s see how things are shaping up prior to this announcement.

Factors to Watch Out For

iQIYI’s third-quarter 2019 revenues are expected to have benefited from content portfolio strength. The top-line performance is likely to reflect strong demand for company-produced drama series, original movies and variety shows.

At the end of the second quarter, total subscribing members were 100.5 million, up 98.9% year over year. The momentum is expected to have continued in the to-be-reported quarter, primarily owing to content strength.

During the third quarter, iQIYI’s content slate included Love and Destiny, Arsenal Military Academy, A Little Reunion and My Mowgli Boy. The company also successfully launched several highly popular variety shows such as The Rap of China 2019, The Big Band, Me and My Country, and Mr. Housework.

Notably, per App Annie’s latest data, iQIYI’s mobile app was placed at #3 in the consumer spend ranking of its Worldwide App Index for the third quarter of 2019. Notably, Tinder and Netflix were ranked #1 and #2, respectively.

Higher consumer spending on iQIYI’s platform, as reflected by the data, is expected to have driven the top line in the to-be-reported quarter.

However, a waning macroeconomic environment in China and regulatory headwinds are expected to have hurt advertising revenues in the to-be-reported quarter. In the last reported quarter, online advertising service revenues decreased 16% to RMB2.2 billion.  

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates.

iQIYI has a Zacks Rank #3 and an Earnings ESP of 0.00%, which makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Activision Blizzard has an Earnings ESP of +24.30% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

iHeartMedia (IHRT - Free Report) has an Earnings ESP of +3.17% and a Zacks Rank #2.

Take Two Interactive (TTWO - Free Report) has an Earnings ESP of +6.96% and a Zacks Rank #3.

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