On August 6, Baidu stock fell below $100 for the first time in five years. In part, its falling stock value resulted from the trade tensions between the US and China. In a sense, the trade war is hurting Baidu’s (BIDU) revenue because fewer companies are advertising on its platform. The company is also facing a rising number of challengers in a field it has dominated for a long time.
On August 12, Reuters reported that ByteDance plans to launch a new search engine in China to rival Baidu. ByteDance owns TikTok, an app that enables users to create short videos. The popular app has over 200 million users in India alone, with 120 million daily active users. Moving into the search engine segment means that ByteDance would compete with Baidu and Tencent Holdings (TCEHY), among others.
On the other hand, Tencent is developing a search function for use by WeChat users. Statistics indicate that the number of Chinese Internet users spending time on smartphone apps is increasing. This is a challenge to Baidu, whose audience primarily uses desktop PCs and laptops.
In its Q1 2019 earnings results, Baidu revealed a revenue loss of $47 million. According to the company, this loss occurred due to campaign expenses to promote the Baidu app. Since the release of its results, the stock has lost nearly 38% in market value.
Mixed investor activity in Baidu stock
With the challenges Baidu is facing in the background, investor activity is mixed. Although some investors are increasing their positions in the Chinese tech giant, others are decreasing their positions. Lindbrook Capital LLC, a registered investment adviser, increased its holdings in Baidu to 328, according to its SEC filings. The RIA only held 82 shares prior to filing its Form 13F on July 24.
According to Baidu’s latest SEC filing, 385 holders reduced their positions while 358 holders increased their positions. With 112 positions held unchanged, the number of institutional holders in Baidu total 855 at the time of filing. These institutional holders had a total of 207.13 million shares, which indicates impressive interest in the company.
On the other hand, Bender Robert & Associates, an equity portfolio manager, continued to decrease its position in Baidu. The EPM cut its holdings in Baidu by $31,000 to 14,100 shares.
However, many analysts watching the Baidu stock maintain a “buy” rating, although a bit of pessimism has surfaced. Hans Chung, an analyst with KeyBanc, cut his price target for Baidu from $160 to $148. Plus, Tian Hou of TH Data Capital slashed the price target for Baidu stock to $135 from $220.