Shares of Chinese video streaming platform iQIYI (NASDAQ: IQ) plunged 5.92% in pre-market trading on Wednesday following the release of its first-quarter 2025 financial results that fell short of analyst expectations. The company reported declines in both revenue and profitability compared to the same period last year.

For Q1 2025, iQIYI posted total revenues of RMB7.19 billion (US$990.3 million), representing a 9% decrease year-over-year. This figure missed the average analyst estimate of RMB7.08 billion. The decline was primarily attributed to lower membership services revenue, which fell 8% due to a lighter content slate compared to the same period last year.

The company's profitability also took a hit, with net income attributable to iQIYI dropping to RMB182.1 million (US$25.1 million) from RMB655.3 million in Q1 2024. Diluted earnings per American Depositary Share (ADS) came in at RMB0.19 (US$0.03), falling short of the mean analyst expectation of RMB0.20 per share. On a non-GAAP basis, diluted earnings per ADS were RMB0.31 (US$0.04), down from RMB0.87 in the first quarter of 2024.

Despite the disappointing results, iQIYI's CEO Yu Gong remained optimistic, stating, "We delivered a solid first quarter, with total revenues and operating income growing sequentially by 9% and 20%, respectively." He also noted that the company's long-form dramas continued to lead in total viewership market share, while micro dramas demonstrated notable growth in viewership and engagement during the quarter.

The significant stock price drop reflects investor concerns about iQIYI's ability to maintain growth and profitability in the competitive Chinese streaming market. The company's performance may also be impacted by broader economic challenges in China and changing consumer behaviors in the post-pandemic era.