This Stock Is Soaring As We Speak…
Dear Rundown Reader,
Not all initial public offerings are created equal.
Some stocks IPO with great gains only to fizzle. GoPro’s a great example.
Some stocks IPO and tank immediately. Look no further than Blue Apron.
But, a special group IPO strong and get only stronger.
When this happens it’s a marvel to sit back and watch.
Especially if you have money in on the action.
Today, a close look at the “Netflix” of China and how it’s turned from an intriguing speculative IPO to one of the year’s best performers.
But first a quick letter on the airline industry:
“I wouldn’t back away from them. They’ve tanked and always rebounded. Allegiant, who is a secondary airport provider is completely replenishing its existing fleet. My favorite is still Southwest, free bags”
We hope Allegiant does after watching that telling 60 Minutes report. But we agree, free bags are great. Now if we could only figure out how to get into boarding group A we’ll be golden.
Your Rundown for Friday, June 15, 2018…
The “Netflix of China” Is One Of Nasdaq’s Brightest Stars
How’s a 125% return in less than three months sound?
That’s how much China’s streaming media behemoth iQIYI Inc (NASDAQ: IQ) is up since IPOing late in March.
According to Bloomberg, this triples the average return of other “cross-border listings from China.”
Here’s the chart.
IQ, a spin-off of Chinese tech giant Baidu, was founded in 2010. Since then the company’s vaulted itself into prominence, becoming one of China’s most popular streaming services.
The stock IPO’d to the Nasdaq on March 28, 2018 at price of $18 per share. Today, pre-market a share costs $41.00.
This equates to adding “$13 billion in market value,” as reported by Bloomberg.
An incredible run in the span of a few months.
IQ’s success is pretty straightforward.
They have a strong revenue stream, a growing subscriber base and beneficial partnerships lining up.
The model for success in streaming is simple.
Prove you can continually build on your subscriber base to grow revenue and you are good to go.
IQ is doing exactly that.
Here are a few of the details.
The New York Times reported in March IQ claimed 60.1 million subscribers, with 59 million of those as paid consumers as of February.
By comparison, Netflix currently boasts 125 million subscribers worldwide, according to Statista.com.
But IQ has plenty of room to grow this number, which is fundamental to their success moving forward.
China’s emerging middle class, with a higher disposable income for services like IQ’s, means millions of new potential subscribers for the company.
If you extrapolate the drivers for Netflix’s success, it’s easy to see why Wall Street is optimistic about IQ.
Business Insider for example notes, both Credit Suisse and Goldman Sachs currently have “positive ratings” for IQ.
And IQ is sitting idling by while enjoying the run either.
They’ve recently shaken up their board, and are adding new partnerships left and right.
They are also in the process of launching a new AI driven user-generated content service.
We think folks are going to love that.
And so should you.
Because it means IQ’s incredible run isn’t over yet.
Now, turning to the markets this morning…
Market Rundown for Fri., June 15
Yield on the 10-Year Treasury sits at 2.932% this morning, down 0.014.
S&P 500 futures are down 8.75 at 2,774.
Oil’s flat at $66.87.
Gold’s down $5.70 to $1,302.
Bitcoin goes for $6,536 this morning, according to CoinDesk.
We’ll talk again on Monday.
Have a great weekend.
For the Rundown,