Chinese stocks are falling, but does Baidu now have upside potential?
Talking Numbers Facebook fan Neeraj Sharma asked, “Could you please include BIDU in your Talking Numbers?”
Baidu dominates the search engine market in mainland China, controlling 78% of the market. It took the lead role when Google decamped to Hong Kong after a feud over censorship with the mainland Chinese government.
The fortune of Baidu’s share price this year has not matched Google’s. Since the start of 2013, Baidu is down nearly 6%. Even worse for shareholders, the company is down almost 20% over the last twelve months.
Compare that to the iShares FTSE China Large-Cap ETF (FXI), an ETF that tracks the large cap Chinese stocks. The FXI is down almost 19% in 2013 and down 2% for the last twelve months.
In Chinese yuan terms, Baidu’s revenues have grown at a fast pace, moving up almost 54% from 2011 to 2012. Earnings per share grew 57% that same period of time. However, the company has lowered its second quarter of 2013 guidance back in April, saying it expects revenues of between $847 million and $867 million. Before then, the market was expecting revenues of $863 million.
Baidu is a bet on the Chinese economy, but is it a safe bet?
We ask CNBC contributors Steve Cortes, Founder of Veracruz TJM, and Richard Ross, Global Technical Strategist at Auerbach Grayson, to look at Baidu.
To hear Cortes and Ross analyze Baidu, watch the video above.