iQIYI, Inc (IQ) saw a pre-market dip in stock price by 3.36% on April 14th, 2021, coming to a rest at USD$16.10. With a variety of internal and external factors at play, investors seem to be approaching this stock cautiously while being aware of a promising long-term potential uptrend.
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Where Does IQ Stand?
Despite recent positive developments, including having secured exclusive rights to broadcast the third season of ‘Youth With You’, an instant hit variety show that is gaining further traction both domestically in China and overseas, IQ stock prices seem to be suffering.
Credit Suisse Unloads IQ
This issue has the potential to be massively exacerbated by the news that Credit Suisse unloaded significant blocks of IQ stocks on the market after the market close on April 13th, 2021. An astounding 35 million U.S. share of the online Chinese entertainment company were listed on the market by the bank. Credit Suisse offered the IQ stocks for USD$15.85-16.35.
Impact of Credit Suisse’s Move
With no negative press or changes in the business model or performance, this move by Credit Suisse still has the potential to create a snowball effect of panic. While there are a host of reasons behind such big sales of stock, there is a risk of investors attributing the sale to insider information in regards upcoming reasons for stock prices to crash. Fortunately, cooler heads seem to have prevailed, for the time being, seeing how IQ manages to mostly recover from particularly volatile dips.
A major concern of U.S. investor with IQ stock is that of U.S.-Chinese tensions. The Holding Foreign Companies Accountable (HFCA) Act requires any foreign companies listed on U.S. stock exchanges to be compliant with U.S. auditing standards for the most recent 3 years. Should a foreign company fail to meet these standards, they run the risk of being delisted by the SEC, which is the driving fear behind the recent market performance of many foreign companies.
Outlook of IQ
Furthermore, news of increased oversight of China-based tech companies by the Chinese government has also contributed to a general uneasiness among U.S. investors in regards Chinese companies. Nevertheless, IQ is on the radar of many investors for when tensions between the two superpower economies ease up.