iQiyi (IQ)

[patriotcat2002]

Is iQiyi the Next Netflix?
The clearly bullish implication from that comparison is that IQ could have huge upside ahead. After all, the market in retrospect badly underpriced Netflix’s users in 2014.
NFLX stock has risen about eight-fold since the end of that year. And at the moment, the market appears to be undervaluing iQiyi’s users. Each Netflix user (worldwide) is worth about $1,280 based on the current market cap; the figure for IQ is just $390.

So if an investor assumes that iQiyi can grow its streaming at a similar rate as did Netflix, and that the per-user value will grow to even half that of Netflix, there’s big upside here. That model would value iQiyi at over $100 billion and IQ stock at roughly $130 per ADS, quadruple current levels. Discounted back at 10%, IQ right now should be worth about $66, double its share price.