On 6-June-2018, we introduced our subscribers to iQIYI (pronounced “eye-chee-yee”). Recall that iQIYI is a Chinese version of NetFlix. It is important to note that IQ has a different in business model the NetFlix, one that seems to work well in Asia. While NetFlix is more subscription-based, iQIYI captures revenues primarily through advertising. While we think they will pick up subscription revenues in the longer term, it is clear the company is focusing heavily on customer acquisition. We suggest trades in this name as it is not widely covered in the US by analysts yet and the company is not a daily topic of conversation on popular financial news shows. We think this causes the share to swing more wildly. As a result, we think the stock price becomes overpriced at times and underpriced at others. As options specialists and disciplined traders who focus on fundamentals, technical sentiment (when possible) and we think this gives us the opportunity to take advantage of price dislocations.
