The Netflix of China tanks after missing on sales and profits

iQIYI/PRNewsfotoiQIYI’s Summer Smash Hit Drama “Story of Yanxi Palace” Comes to a Close, Being Streamed Over 15 Billion Times
  • iQiyi, seen as the “Netflix of China,” missed on both the top and bottom lines.
  • Shares tumbled 12% following the company’s third-quarter results.
  • iQiyi added a net of 13.5 million subscribers in the third quarter.
  • Watch iQiyi trade in real time here.

iQiyi, widely seen as the “Netflix of China,” tumbled as much as 12% Wednesday after the company reported third-quarter sales and profits that fell short of Wall Street estimates.

The Chinese video-streaming giant on Tuesday announced a loss of $US4.30 a share, missing the $US2.80 loss that was expected by Wall Street analysts, according to Bloomberg data. The company generated $US6.91 billion in sales, missing the $US6.97 billion that was anticipated.

Meanwhile, the company added a net of 13.5 million subscribers in the third quarter. By the end of September, iQiyi had a total of 80.7 million subscribing members, over 98% of whom were paying. That’s up 89% versus a year ago.

“Our library of premium content continued to excel, driving robust growth in subscriber number and membership revenue.,”CEO Yu Gong said in a press release.

“Our record-breaking drama series Story of Yanxi Palace turned out to be a mega-hit for the entire summer, demonstrating our strong capabilities and potentials in producing high-quality premium content. Leveraging our extensive content offerings and expanding distribution network, we are also continuously improving and diversifying our business monetisation.”

For the fourth quarter, the iQiyi expects total revenue to be between RMB6.48 billion ($US943.5 million) and RMB6.75 billion (US$982.8 million), but said its outlook is subject to substantial uncertainty.

iQiyi’s third-quarter subscriber net adds surpassed Jefferies analysts’ expectation.

“The third-quarter paying sub net add accelerated to record high offset by larger-than-expected ad softness attributable to macro impact and proactive customer clean-up,” said Jefferies analyst Karen Chan in a note sent out to clients on Wednesday. “Subscription and content-derived revenue should see relative resilience amid macro uncertainty.”

Chan reiterated her “buy” rating, but lowered her price target to $US30 from $US33 – 50% above where shares were currently trading.

iQiyi shares are down 60% from their June record high, but are up 9% from where they went public in March.

Read more stories on iQiyi:

Now read:

IQMarkets Insider

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.