Baidu (BIDU) Last Update 3/22/21
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Baidu Core
Trefis Price
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TREFIS Analysis

Trefis Report
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Potential upside & downside to trefis price

Baidu Company


  1. Baidu Core constitutes 67% of the Trefis price estimate for Baidu's stock.
  2. Online Video (iQiyi) constitutes 14% of the Trefis price estimate for Baidu's stock.


  1. Latest Earnings
For FY 2020 Revenues came in at RMB 107 billion ($16.4 billion), nearly flat from a year ago due to the COVID-19 pandemic. Operating Income increased by 127% as operational efficiency improved. This further resulted in EPS increasing to RMB 65.54 per ADS compared to RMB 5.68 per ABS in the previous year.

  1. Expect Weak Ad Sales in 2020
Baidu stock has suffered as the virus outbreak put pressure on the advertising industry. Baidu derives most of its revenue from selling digital ads. In 2019, advertising sales contributed 73% of Baidu’s total revenue. Companies, in general, have to scale back operations to curb the spread of the coronavirus, slashing or totally eliminating their marketing budgets.


Below are key drivers of Baidu's value that present opportunities for upside or downside to the current Trefis price estimate for Baidu:

Search Services

  • Baidu Core Revenue: We currently forecast these revenues by Baidu to increase from over $11 billion in 2019 to just over $14 billion by the end of the Trefis forecast period. If the growth in the Chinese economy - particularly the e-commerce market - outperforms expectations, Baidu could benefit from a larger base of advertisers willing to pay for ad slots and prioritized search results. As a result, Baidu could generate higher revenues than we currently forecast. In the event that this figure rises to $20 billion by the end of our forecast horizon, there could be an upside of 15% to the Trefis price estimate. However, if the growth rate slows down and the figure reaches only $12 billion by the end of the forecast period, there could be a downside of about 10% to the Trefis price estimate.

  • iQiyi Revenues: We currently forecast iQiyi revenues to increase rapidly from $4.2 billion in 2019 to over $11 billion by the end of our forecast period. Our assumption for the sustained growth in Baidu's paid subscriber base, which is mainly due to the expectation that internet penetration in China will continue to rise as it has historically - from 19% in 2008 to over 57% in 2018. Comparatively, internet penetration in the U.S. is around 88%. In addition the penetration of smartphones in China is also expected to drive demand for video consumption. If penetration levels in China fails to increase in the next decade or competing for streaming services capture a higher share of the market, the rate of growth of Baidu's user base could slow down. If iQiyi revenues increase to only around $8 billion by the end of our forecast period, there could be a downside of about 10% to the Trefis price estimate.

For additional details, select a driver above or select a division from the interactive Trefis split for Baidu at the top of the page.


Touted as the Google of China, Baidu is the number one Chinese language search provider and the most trafficked website in China. Baidu's main search operation provides search for websites, audio files, and images.

Baidu offers a unique Chinese language search platform to both users and customers. This platform consists of its own websites as well as the Baidu Union, a network of third-party websites and software applications. By generating traffic from its users, Baidu is able to attract business customers that wish to advertise their products and services alongside Baidu's search results and on Baidu's web properties.


Baidu makes the majority of its money from its search operations. Baidu's search advertising business is driven by two important factors that contribute to its significance:

Search market share dominance in China

Baidu dominates the search advertising market in China, with an estimated market share of over 80% (by revenue).

Though Qihoo 360 and Sogou have emerged as credible players in the desktop online search market, Baidu has gained dominance over the country's mobile search market. Baidu also competes with Bing and Google China in the domestic search market.

Demand from online advertisers for keyword advertising on Baidu sites could continue to cause upward pressure on Baidu's Revenue per Search.

Low Internet penetration compared to developed countries

The Internet penetration rate has steadily increased from 19% in 2008 to over 55% in 2017. China’s Internet penetration rate remains low compared to developed countries (for example, the U.S, U.K, France and Japan have penetration rates of over 85%).

Relatively low penetration rates translate into better opportunities for growth as the user base still remains low compared to the total population of the state.


Booming Online Video Market in China

Chinese Online video market has exploded in recent years driven by increasing penetration of smartphone users as well as high speed internet in the region. This is expected to continue to drive iQiyi online video streaming revenues in the coming years.

Threat To Market Share

Baidu’s market share in desktop searches has decreased in recent years, as Qihoo 360 and Sogou have seen significant gains. Nevertheless, Baidu has been able to retain its dominance over the mobile search market (commanding more than 80% market share). Yet Qihoo 360 is taking aggressive measures to increase its share in the mobile search market. If it does so, it could make a serious dent in Baidu’s market leadership. Additionally, since Qihoo and Sogou are ramping up their search monetization, this could also impact Baidu’s ability to raise prices on ad units.

Growing Mobile Users

Driven by rising adoption of mobile Internet and smartphones, Baidu's mobile search users are growing explosively. This has also contributed to increased monetization on the mobile platform.

Mobile revenue now comprises over 50% of overall revenues, as mobile search now accounts for over two-thirds of overall search traffic on Baidu, and its mobile monetization rate has improved over the past few quarters

O2O E-Commerce Initiatives To Drive Baidu's Growth In The Long Run

Baidu aims to fuel the next chapter of its growth with O2O e-commerce initiatives. These include services to connect users to merchants such as online travel, ticket booking, entertainment, food delivery, as well as grocery and other services. The company’s management expects this to be a RMB 10 trillion market opportunity.