Apr 07, 2021 (Baystreet.ca via COMTEX) -- At the end of last month, investors dumped the riskiest China-based stocks. iQIYI's /zigman2/quotes/203657421/composite IQ -0.83% stock collapse is unlikely to recover. The stock peaked at $28.97. Chances are high that it will find new lows in the near term.
IQ stock fell because of a block-trade on March 26 offered by none other than Goldman Sachs /zigman2/quotes/209237603/composite GS -1.53% . The firm sold shares at $15.50. This triggered a panic price drop on the day.
IQ's Q4 results are hardly impressive. It posted a 1% decrease in total revenue, to $1.1 billion. But it lost $200.4 million in the period. This is still a sharp drop from last year. The operating loss margin of 34% suggests that iQIYI will continue to bleed money this year.
Investors may consider bigger Chinese firms like Alibaba /zigman2/quotes/201948298/composite BABA -0.67% , JD.com /zigman2/quotes/205122565/composite JD -2.10% , or Baidu /zigman2/quotes/209050136/composite BIDU -3.39% . Not only do they have large market capitalizations but their business is durable. For example, Alibaba's e-commerce platform faces no competition. Its mobile channels grow every quarter. JD.com spun off its Cloud and AI business on March 31 at a $2.4-billion valuation. And Baidu is considered the Google of China.
iQIYI is a high-risk stock that investors should avoid.
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