Analysis of the Impact of Yangzhou iQIYI Paradise on iQIYI's Valuation and Business Diversification

Based on the acquired data and latest information, I will provide a comprehensive analysis of the impact of the opening of Yangzhou iQIYI Paradise on iQIYI’s valuation and business diversification strategy.

• Current Price: $1.92 (as of January 1, 2026) [0]
• Market Cap: $1.85 billion [0]
• 52-Week Range: $1.50 - $2.84 (currently at a relatively low level) [0]
• P/E Ratio: 146.05x (extremely high valuation multiple, reflecting market’s high expectations for future growth) [0]

• Net Profit Margin: 0.32% (extremely low profitability) [0]
• Operating Margin: 2.96% (at a low level) [0]
• ROE (Return on Equity): 0.66% (seriously low capital return rate) [0]
• Current Ratio: 0.42 (weak short-term solvency, existing liquidity risk) [0]
• Financial Analysis Rating: High Risk [0]

• Member Services: 60.8% (absolute mainstay) [0]
• Advertising Revenue:19.6% [0]
• Other Services:9.9% [0]
• Content Distribution:9.7% [0]

• Median Target Price: $2.10 (9.4% upside potential from current price) [0]
• Rating Distribution:50% Buy /40.9% Hold /9.1% Sell [0]
• UBS upgraded rating from Neutral to Buy in August 2025 [0]

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According to public information, Yangzhou iQIYI Paradise has the following core features:

• Small-scale
  : Different from the heavy asset model of traditional large-scale parks like Disney and Universal Studios [1]
• High Interactivity
  : Emphasizes immersive experience and user participation, such as “Strange Tales of Tang Dynasty” puzzle-solving tasks and “The Knockout” old house experience [2]
• Rapid Iteration
  : Can quickly update content and experiences to respond to market changes and IP popularity [1]

• Adopts cutting-edge technologies like Virtual Reality (VR) and Artificial Intelligence (AI) [1]
• Provides realistic and exciting experiences in a small physical space [1]
• Combines with Yangzhou’s local culture, such as the “Flying Over the Grand Canal” experience project [1]

Covers multiple hit IPs of iQIYI, including:

• “The Knockout” (anti-crime theme)
• “Love Between Fairy and Devil” (xianxia drama)
• “Mysterious Lotus Casebook” (wuxia suspense)
• “Strange Tales of Tang Dynasty” (ancient costume detective)
• “My Altay” (realistic theme) [2]

• iQIYI: Provides technology, content, and operations (light asset investment) [1]
• Partner: Responsible for fixed asset investments like land and equipment (heavy asset part) [1]
• Revenue Sharing: Both parties share revenue from tickets, catering, derivatives, etc. [1]

This model significantly reduces iQIYI’s capital expenditure risk, allowing it to expand rapidly without bearing excessive financial pressure.

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##3. Analysis of Impact on Valuation

###3.1 Short-term Impact (Neutral to Slightly Positive)

1. Revenue Diversification Expectation
   : Analysts may view offline parks as a potential new revenue source, helping to alleviate concerns about over-reliance on single membership revenue
2. Improved IP Monetization Efficiency
   : Extends IP lifecycle through offline experiences and increases return on content investment
3. Change in Valuation Method
   : May introduce Sum of the Parts (SOTP) valuation method, giving higher multiples to offline businesses

1. Execution Uncertainty
   : As a globally pioneering new format, there is a lack of verifiable historical data
2. Initial Investment
   : Although it is a light asset model, there is still a need to invest in technology and content production
3. Profitability Verification Period
   : The market needs to wait for actual operation data before giving a clear valuation premium

• P/E ratio of 146.05x [0] already implies high growth expectations
• In the short term, unless the park shows超乎预期 profitability, the valuation multiple will be difficult to expand significantly

###3.2 Medium-to-Long Term Impact (Depends on Execution Results)

• If Yangzhou Park successfully achieves profitability (single-store EBITDA turns positive)
• And can quickly replicate to other cities (Kaifeng and Beijing are already planned)
• The market may regard offline entertainment business as an independent growth engine
• Valuation method may shift from single video platform valuation to “content + experience” composite valuation
• Long-term target price may exceed $3.00 (56% upside from current)

• The park achieves break-even and becomes an auxiliary means for brand building and IP value enhancement
• Limited impact on overall valuation, mainly serving to stabilize member churn rate
• Stock price may fluctuate in the range of $2.00-$2.50

• The park continues to lose money, dragging down overall profitability
• The market questions the effect of strategic diversification
• Stock price may fall to $1.50 or even lower

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##4. Evaluation of Business Diversification Strategy

###4.1 Analysis of Strategic Necessity

1. Over-reliance on Membership Revenue
   (60.8%): Slow membership growth and limited price increase space [0]
2. Fragile Profitability
   : Net profit margin of only 0.32%, weak risk resistance [0]
3. Fierce Market Competition
   : Intense competition among platforms like Tencent Video, Youku, and Mango TV
4. High Content Costs
   : Costs of top dramas continue to rise, compressing profit margins

Yangzhou iQIYI Paradise is a key step for iQIYI to transform from a “content platform” to an “IP ecosystem operator”. This transformation aligns with the following strategic logic:

###4.2 Path to Maximize IP Value

Online Content → Membership Subscription → IP Derivatives → Offline Experience → Ecosystem Closed Loop
    ↓           ↓           ↓           ↓
  Initial Consumption   Paid Stickiness    IP Value Extension   Deep Emotional Connection

• Users from viewers of “The Knockout” to experiencers of Gao Qiqiang’s old house [2]
• From drama followers of “Mysterious Lotus Casebook” to role-players of jianghu guests [2]
• IP changes from “screen story” to “life experience”, significantly deepening emotional connection [2]

###4.3 Synergy with Existing Businesses

• Park members may receive exclusive benefits on the video platform
• Platform VIP users enjoy discounts on park tickets
• Form an interconnected “online + offline” membership system

• Brand placement and scene advertising in the park
• Cross-marketing of offline traffic to online advertising

• The park serves as the most important offline sales scene for derivatives
• Scenario-based triggers for purchase impulses (e.g., “Love Between Fairy and Devil” peripherals)
• The discussion热度 of iQIYI peripheral collection cards on Xiaohongshu has shown initial potential [2]

• Offline user behavior data feeds back to content creation
• Quantitative analysis of IP popularity to guide subsequent investments

###4.4 Industry Benchmark Analysis

• Disney
  : Park business accounts for about 30% of revenue, an important profit center and IP monetization channel
• Universal Studios
  : Achieves two-way empowerment between movies and parks through IPs like Harry Potter and Minions
• Netflix
  : Has not yet entered offline on a large scale and is still in the exploration stage

The “small-scale, high interactivity, rapid iteration” model of iQIYI is an innovative attempt globally [1]. If successful, it may become a new business model exported by Chinese entertainment companies to overseas markets.

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##5. Risks and Challenges

###5.1 Execution Risks

1. Operation and Management Challenges
   : Park operation is significantly different from video platform operation, requiring new capabilities
2. Consistency of User Experience
   : How to maintain quality consistency between online content and offline experiences
3. Seasonal and Regional Restrictions
   : Yangzhou project may face seasonal fluctuations in passenger flow

###5.2 Financial Risks

1. Cash Flow Pressure
   : Although it is a light asset model, continuous investment in technology and content production is still needed
2. Return Cycle
   : Park business usually takes a long time to achieve profitability
3. Liquidity Risk
   : Current ratio is only 0.42 [0], so capital expenditure needs to be controlled carefully

###5.3 Market Risks

1. Consumer Acceptance
   : Market education and acceptance of new formats take time
2. Increased Competition
   : Wanda Pictures, Enlight Media, etc. are all布局 IP derivative businesses [1]
3. IP Popularity Attenuation
   : Continuous updates are needed to maintain the sustained appeal of popular IPs

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##6. Investment Recommendations and Key Focus Points

###6.1 Recommendations for Existing Shareholders

• Hold and Wait
  : Wait for actual operation data after the opening of Yangzhou Park
• Key Indicators
  : First-month passenger flow, per capita consumption, social media reputation
• Valuation Anchor
  : Current target price of $2.10 [0] can be used as a short-term reference

• Focus on Verification Points
  :
  • Q1-Q2 2026: Whether Yangzhou Park achieves break-even
  • Progress of Kaifeng and Beijing projects
  • Contribution ratio of park business to overall revenue and profit
• Catalyst
  : If the single-store model is verified successfully, it may trigger a valuation re-rating

• Verification of Strategic Transformation
  : Whether the transformation from a video platform to an IP ecosystem operator is successful
• Second Growth Curve
  : Whether offline entertainment business can become a real growth engine
• Target Price Space
  : If successful, it is expected to reach $3.00+, with a 56% upside from current price

###6.2 Key Monitoring Indicators

• Monthly passenger flow of the park
• Per capita consumption amount (tickets + secondary consumption)
• Member conversion rate (tourists → platform members)
• IP attraction ranking (popularity of different IP projects)

• Revenue share of park business
• Gross margin of offline business
• Whether overall ROE improves (currently only 0.66%) [0]
• Free Cash Flow (currently 1.94 billion) [0]

• Expansion speed of new projects
• IP reserve and update frequency
• Degree of integration with the platform membership system

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##6. Conclusion

###6.1 Strategic Evaluation

The opening of Yangzhou iQIYI Paradise is an important breakthrough for iQIYI at the

:

1. ✅ Breaks over-reliance on single membership revenue and moves towards a diversified revenue structure
2. ✅ Maximizes IP value, transforming from one-time content consumption to sustainable experience economy
3. ✅ Light asset model reduces financial risks and has potential for rapid replication
4. ✅ Aligns with the entertainment consumption upgrade trend from “watching dramas to being in the drama” [2]

1. ⚠️ No mature global benchmark cases, high execution risk
2. ⚠️ Profitability yet to be verified, difficult to contribute significant profits in the short term
3. ⚠️ Requires new operation capabilities, increasing management complexity

###6.2 Summary of Valuation Impact

Time Horizon	Valuation Impact	Driving Factors
Short-term (0-6 months)	Neutral to Slightly Positive	Enhanced strategic narrative but lack of data validation
Medium-term (6-18 months)	Execution-dependent	Single-store profitability determines market confidence
Long-term (18+ months)	Potential Significant Upside	Successful transformation may trigger valuation re-rating

###6.3 Final Judgment

Yangzhou iQIYI Paradise is an important exploration of iQIYI

, but its short-term catalytic effect on the stock price should not be overestimated. Investors should:

1. Recognize the Strategic Direction
   : The logic of transforming from a content platform to an IP ecosystem operator is valid
2. Maintain Rational Expectations
   : Give the management team 12-18 months to verify the business model
3. Focus on Key Nodes
   : The operation data of Q1-Q2 2026 will be an important verification point
4. Balance Risk and Return
   : Current stock price of $1.92 is already at a relatively low level, with limited downside space, but needs to wait for clear catalysts

Long-term Buy / Short-term Hold and Wait

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##7. References

[0] Jinling API Data
[1] East Money - “How to Sustain the ‘IP Fever’ in Film and Television in 2026?” (https://finance.eastmoney.com/a/202512303605553574.html)
[2] Sina Finance - “2026 Entertainment Consumption Guide: From ‘Watching Dramas’ to ‘Being in the Drama’” (https://cj.sina.cn/articles/view/5726009017/1554bf6b9027017yvu)