iQIYI ULTIMATE CHINESE MOONSHOT
Seriously what’s not to like about IQ? It is the leading streaming company in China. It has over 40 production studios and award-winning content. Then to boot, China is a closed shop with audience potentials of over 1 billion viewers. IQ has over 100 million paid subscribers.
“Story of Yanxi Palace” is a 70 show instalment that has attracted 15 Billion views. That’s BILLION! The quality is superb and the actresses in particular are stunning. IQ’s creative production houses do this over and over again. This is the stuff that makes Art valuable. The talent for making a top-quality film and video has a huge bar of entry. Any company can make cola. But high-quality studio production is extremely difficult, yet IQ has the infrastructure to do it. And continues to produce award-winning shows.
This is episode # 1 on Youtube with subs: Extremely well acted. This is when the girls first enter the Forbidden City. 15 Billion views can’t be wrong!
Here is episode # 58 on Youtube with subs. The acting is very good. It is a stunning effort.
One of the interesting things about IQ is that it is only traded on US Exchanges. I wonder if Trump or Biden can find a NATIONAL SECURITY reason to block investors. After all, there are ancient Dynasty military uniforms shown. Perhaps that can be construed as supporting the Chinese Military; if you’re a lunatic.
My view is that it will have its own IPO in Hong Kong. 60% of IQ stock is owned by BIDU. over a year ago BIDU and Tencent had an interest in buying into IQ but BIDU called off the talks. Bidu clearly understands they have a gold mine, especially for advertising.
Four Consecutive quarterly earnings surprises:
Earnings Date EPS Estimate EPS Actual Surprise Surprise %
Q1 2021 (Mar 2021) -0.33 -0.25 0.08 23.14%
Q4 2020 (Dec 2020) -0.34 -0.33 0.02 5.26%
Q3 2020 (Sep 2020) -0.40 -0.24 0.15 38.16%
Q2 2020 (Jun 2020) -0.45 -0.28 0.17 36.98%
The media business is front-loaded. Production is very expensive. Consider the Andy Griffith Show. It started in the 1960s and is still in syndication today, still making money. You don’t get that with a case of cola. Thus, what really matters in media companies is production quality, repeatability to produce hit shows, and the long-range path of syndication.
105 million subscribers.
Netflix has 74 million US and Canadian subscribers and 207 Million global subscribers total. There are differences, of course, Netflix charges more. But considering that China is a closed market with nearly 1.5 Billion people, IQ has a long way to grow its market share.
As far as I am concerned, IQ has mastered high-quality media production. To those that seek numerically quantified means of measuring Artwork, it can’t be done. In fact, that is what makes stock-picking an art.
When ATT embarked on digital streaming, I knew they would not be successful. They don’t understand the art. So they were just projecting numbers. Art is much more subjective. It is not a case of cola.
Netflix is a company that does excellent production but production in the USA is absurdly expensive. Netflix produced wonderful content and shows but the content owners stiffed them. So their excellent work became less valuable with no future syndication. They have made changes to that model.
Nevertheless, Netflix is entangled with the all-powerful SAG-AFTRA so there is no cost efficiency in their production. This is a Union only Jimmy Hoffa could love.
There are no unions in China so the costs of production, obtaining scripts, actors and makeup and costume design are open to all. My view and I don’t care what the industry involved, Look for the Union Label and SELL! Unions are nothing but menace. They serve no purpose other than barring the right-to-work states and finding cunning ways to bar independent work.
Years ago I was in NYC at the world’s largest Television studio doing some Voiceover work. I was non-union. They forced the production company to hire a UNION stooge to stand on the set and get paid for doing absolutely nothing.
At IQ studios this lunacy would never happen. Production not pandering to this vicious union.
Thus if you have an interest in global media and like the idea of a fresh start, the IQ may be the stock of a lifetime. But don’t expect to use the metrics Buffett might use for a cola company. They do not apply to the creative arts. But IQ production costs are significantly lower than the entrenched UNIONIZED WEAPONIZED world of Hollywood.