(Yicai Global) Aug. 31 -- Shares in iQiyi slumped despite the Chinese Netflix-like video streaming platform logging an 85 percent narrowing of its net losses in the second quarter from the same period last year due to cost cuts and membership fee hikes. The partnership with TikTok’s Chinese version will take effect this quarter, the firm’s chief executive officer said.

iQiyi’s share price [NASDAQ:IQ] closed down 9.6 percent at USD3.55 yesterday. The stock has lost nearly 18 percent in value in the last three trading days.

This is despite the firm’s losses shrinking to CNY214 million (USD31 million) in the three months ended June 30, according to the Beijing-based company’s latest earnings report released yesterday.

Membership subscriptions, the firm’s biggest earner for the last four years, gained 7 percent over the period to CNY4.3 billion (USD263 million), accounting for 64 percent of all revenue, the highest ever. But growth remained below expectations, which might have to do with a 25 percent hike in subscription rates introduced at the end of last year.

Fewer movies were released during the second quarter due to renewed outbreaks of Covid-19, meaning that less films were uploaded to streaming media, hence the slower growth in subscriptions, Chief Executive Officer and founder Gong Yu said at the earnings call. But the income from memberships was in line with expectations.

The tie-up with Douyin, signed in July, will come into effect this quarter, Gong said. The two platforms will work together to create short clips of iQiyi’s long content.

iQiyi managed to cut its sales and administrative expenses by 30 percent in the first two months of 2022 year on year. Last December it laid off up to 40 percent of its headcount in non-core departments such as short videos, gaming and literature, a company insider told Yicai Global. It also slashed new content costs to the lowest in almost four years in the second quarter to CNY3.9 billion (USD565 million).

Since the pandemic broke out, iQiyi’s membership business has not been developing normally, Gong said. Although in the short term the impact was positive, in the long run it has turned negative. However, as the economy picks up and people are more willing to spend, Gong said he is optimistic about future growth in subscriptions.

The summer will be a peak season and many good TV dramas were released on iQiyi this month, so there is every reason to be positive about the third quarter, Gong said. In the future, the firm will increase investment in some new growth points to boost revenue.

Editors：Shi Yi, Kim Taylor