Benchmark maintains iQIYI stock rating at Hold on AI strategy shift - Investing.com Canada

Benchmark has reiterated its Hold rating on iQIYI following the Chinese streaming platform's second-quarter 2025 results, which revealed substantial operational headwinds across the business. The company reported an 11% year-over-year revenue decline, with weakness evident across its three primary revenue streams: membership revenue contracted 9%, advertising revenue decreased 13%, and content distribution faced similar pressures. The stock currently trades at $2.30, representing a significant discount to Wall Street's consensus price target of $2.55, though the stock has appreciated over 20% in the past week.

The Q2 2025 earnings report marked a clear miss relative to analyst expectations. iQIYI reported earnings per share of -0.14 against a forecast of -0.03, while revenue came in at 6.63 billion RMB, falling slightly below the anticipated 6.65 billion RMB. Despite maintaining profitability over the last twelve months with a 9.4% revenue decline across that extended period, the company's near-term trajectory has deteriorated. Benchmark's decision to revise fiscal year 2025 projections downward reflects these operational challenges, with ongoing competitive dynamics from fast-growing mini-drama platforms and management's cautious guidance cited as primary factors constraining growth expectations.

However, Benchmark's continued Hold rating incorporates emerging recovery signals. The research firm identified early signs of business stabilization in Q3 2025, with quarter-over-quarter improvement in membership revenue driven by an enhanced content lineup featuring dramas and variety shows that have resonated with audiences. Beyond near-term operational metrics, Benchmark highlighted supportive regulatory developments in China's content production environment. New policies from the National Radio and Television Administration (NRTA) aim to shorten production cycles and expand creative freedom, potentially creating a more favorable industry backdrop for established content producers like iQIYI.

Wall Street maintains a cautiously optimistic but measured stance, with consensus ratings at Hold across multiple research firms. The analyst community's average twelve-month price target of $2.55 implies significant upside from current levels, though this assumes successful execution of management's recovery strategy and improved competitive positioning against emerging mini-drama entrants. The divergence between near-term revenue headwinds and medium-term strategic positioning reflects the analytical uncertainty surrounding iQIYI's ability to stabilize its core streaming business while capitalizing on favorable regulatory and content production trends.