The Netflix of China sets sights on profitability but hurdles mount

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Hello reader,

With lofty valuations, come lofty expectations. The stock market’s pandemic darlings now are learning that the hard way as stay-at-home demand subsides around the world.

Retail trading platform Robinhood (HOOD, NDAQ), video-conferencing firm Zoom (ZM, NDAQ), exercise-bike maker Peloton (PTON, NDAQ) and the largest US telehealth company, Teladoc Health (TDOC, NYSE), are all currently trading more than 80% below their pandemic-era highs.

These drop offs are not entirely without reason. Robinhood has seen its second-quarter revenue fall nearly in half, Zoom recently cut its forecasts for annual profit and revenue, Peloton is struggling to survive as it faces a potential cash crunch, and Teladoc posted a loss of over US$3 billion in its latest quarter.

In short, these are challenging times for many firms that were flying high not too long ago.

Against this backdrop, we analyze how similarly struggling Chinese longform video streaming firms (another of the pandemic darlings) iQiyi (IQ, NDAQ), Tencent Video, and Alibaba-owned Youku aim to put a lid on exorbitant costs to become profitable and turnaround their fortunes in today’s featured piece.

The premium story also highlights how original programming has weighed on these firm’s bottom lines and how iQiyi, labeled the “Netflix of China,” managed to stay in the black for back-to-back quarters through price hikes and downsizing its workforce.

Further, Tech in Asia dissects iQiyi’s failed gaming ambitions and its “apple tree” content strategy, which appears to be strikingly similar to how Disney (DIS, NYSE) uses the Marvel universe.

— Shravanth

THE BIG STORY

Image credit: Timmy Loen

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