Why iQiyi Stock Soared Today

What happened

Shares of Chinese online entertainment company iQiyi (NASDAQ: IQ) surged on Thursday, despite no meaningful news. The stock has been rocketing higher since early May, more than doubling over the past six weeks. Shares of iQiyi were up about 16.5% when the market closed.

So what

iQiyi did announce changes to its board of directors on Thursday. The company appointed Ctrip CEO Jane Jie Sun to the board as an independent director and a member of the audit committee. Dr. Haifeng Wang, senior vice president of Baidu and general manager of that company’s artificial intelligence (AI) group, was also appointed to the board.

Image source: Getty Images.

The stock likely is moving for other reasons, though, as these board changes are minor developments. iQiyi also announced on Thursday an AI programming competition aimed at video-based multimodal biometric recognition. Participants will attempt to identify celebrities in iQiyi’s vast collection of video data, with the winning team set to receive 200,000 Chinese Yuan Renminbi, or about $31,000. Again, this piece of news is minor.

Now what

Instead of being driven by news, the stock’s move higher on Thursday may simply be driven by investor optimism. The company, often referred to as the Netflix of China, is growing revenue at a breakneck pace. In the first quarter, revenue shot up 57% year over year. Significant losses and the fact that the company’s gross margin is effectively zero are being ignored by the market.

After rocketing higher over the past six weeks, iQiyi stock doesn’t appear to be slowing down.

10 stocks we like better than iQiyi
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and iQiyi wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 4, 2018

Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Baidu and Netflix. The Motley Fool recommends iQiyi. The Motley Fool has a disclosure policy.

You May Also Like

About the Author: Over 50 Finance