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What’s Happening with Baidu Stock?


Jun. 27 2019, Updated 3:20 p.m. ET

Baidu’s stock has been struggling lately

Chinese Internet giant Baidu (BIDU) was one of the Nasdaq Composite Index’s biggest drivers on Tuesday, June 25. The stock fell over 3% after it fell by a whopping 34% in May. The company’s growth has struggled due to increasing competition from local rivals like Byte Dance. The stock tanked by over 20% on May 16 alone when it reported its earnings. Baidu’s revenue growth has slowed down drastically over the previous three quarters.

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Baidu’s stock looks cheap but faces stiff challenges

While its streaming video spin-off iQiyi (IQ) has been growing at a fast clip, Baidu has been absorbing its rising losses, as the streaming giant is spending heavily to increase its content library. As a result, the company posted its first loss ever as a public company.

The company is currently trading at only 13.3x its 12-month trailing earnings and only 2.1 times its trailing-12-month sales. However, that might not necessarily mean that the stock is cheap, given slowing economic growth in China, and increasing competition for its ad business.

In the long term, however, there is still plenty to like about the stock. The company still owns a substantial share of its spin-off iQiyi, which is dubbed the Netflix of China. The streaming company is likely to eventually pay off. Baidu has also invested heavily in artificial intelligence and autonomous vehicles and Internet-of-Things, which could pay off in the future.


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