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Which Is The Better Buy: Netflix Or China's Fast-Growing Iqiyi?

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Which Is The Better Buy: Netflix Or China's Fast-Growing Iqiyi?
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Which is a better buy: American streaming video giant Netflix, Inc. (NASDAQ: NFLX) or its China equivalent Iqiyi Inc (NASDAQ: IQ)?

The Pros

Miller Tabak equity strategist Matt Maley and Boris Schlossberg, managing director of FX strategy at BK Asset Management, discussed the stocks during a CNBC "Trading Nation" segment.

The Thesis

Iqiyi shares began trading in March and are up more than 80 percent since the initial public offering. Over the same time period, shares of Netflix are up 18 percent, making Iqiyi the near-term winner. 

Maley: Cautious On Both

Given Iqiyi's limited time as a public company, it's difficult to gain a better understanding of the stock's prospects from a technical standpoint, Maley said. The stock is also testing its 50-day moving average, which implies investors should be "a little bit careful," he said. 

Investors should also be cautious with what Netflix's chart is signaling, the analyst said: the stock is not far removed from $344, near its intraday low after second-quarter earnings.

In the event that the stock moves below the $344 level, many momentum investors will "start heading for the exits," Maley said. 

Schlossberg: Iqiyi Earnings Don't Matter

Iqiyi addresses a "massive" market in China, which implies it can double its subscriber count from north of 50 million to more than 100 million in just a few years, Schlossberg said during the same CNBC segment. So long as the company achieves this metric, it will be viewed as a "growth darling" by investors irrespective of earnings, he said. 

"I think, very much like Netflix, if it can get the subscriber growth going, it's going to be a good stock going forward." 

Price Action

Shares of Netflix were down more than 2 percent at $355.74 before the close Friday, while Iqiyi shares were down 2.69 percent at $32.14. 

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Photo courtesy of Netflix. 

Latest Ratings for IQ

DateFirmActionFromTo
Aug 2018Goldman SachsDowngradesBuyNeutral
Aug 2018Bank of AmericaMaintainsNeutralNeutral
Aug 2018Credit SuisseDowngradesOutperformNeutral

View More Analyst Ratings for IQ
View the Latest Analyst Ratings

Posted-In: Boris Schlossberg China CNBC Matt Maley Miller TabakAnalyst Color Analyst Ratings Media Best of Benzinga

 

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