Is The Recent Baidu Sell-Off Justified?

by Trefis Team
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The ongoing China – U.S. trade dispute has caused most Chinese stocks to fall, and Baidu (NASDAQ:BIDU) is no exception. The company’s stock has traded down nearly 10% since December 3, and is down nearly 35% in the past six months. Given the company’s strong market position and diversified revenue streams, we believe that the fall in Baidu’s stock is more a result of the geopolitical situation than a company-specific issue.

We currently have a price estimate of $200 per share for Baidu, which is over 10% higher than the current market price. Our interactive dashboard on Baidu’s Price Estimate outlines our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes on its valuation.

Baidu continues to be the largest search engine in China with around a 70% market share, and the company’s content delivery platform (iQIYI, also known as the Netflix of China) continues to witness strong growth momentum. Baidu’s other projects – such as voice assistant and self-driving, among others – have also been seeing promising traction: Baidu’s DuerOS Voice Assistant Install base has eclipsed 100 million, and the company has also roped in over 100 partners in its Apollo self-driving project.

While the company’s Q4 revenue guidance of $3.71-3.89 billion was lower than the consensus expectation of $4 billion, despite Baidu’s growth momentum, the company’s prudence may have been misconstrued by the markets. Although geopolitical tensions have the ability to derail economic growth, we still believe that the company’s scale and business model should allow it to withstand any prolonged trade disputes.

Do not agree with our forecast? Create your own price forecast for Baidu by changing the base inputs (blue dots) on our interactive dashboard.

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