iQIYI is a dominant C‑drama franchise priced for distress—either AI + overseas growth revive the model, or debt and short‑video disruption turn it into a value trap.
Overview
iQIYI (IQ) is a leading Chinese long-form video streamer at a turning point: it retains strong content leadership and brand equity, yet faces structural demand shifts and macro headwinds that have pushed results back into contraction. In Q3 2025, revenue fell to RMB 6.68B (-8% YoY) and the company returned to an operating loss of RMB 121.8M after achieving operating profitability in 2024—highlighting how sensitive margins are to revenue volatility in a content-amortization-heavy model. Strategically, iQIYI is defending attention share by scaling micro-dramas (20k+ titles) while also pushing overseas expansion (membership revenue +~35% YoY in Q2 2025) to diversify beyond a maturing domestic market. Shares trade near distressed levels (~$2, ~0.5x sales, ~1.0x book), setting up a contrarian debate: value trap vs deep-value turnaround aided by ad-cycle recovery and AI-driven efficiency.