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Baidu: Chinese service on the US stock exchange

Baidu: Chinese service on the US stock exchange

23 November 2022

Baidu is actually a Chinese search engine, a competitor of Google and Yandex. However, the company’s shares are traded on Nasdaq, which means they are quite suitable for our research.

Baidu’s reporting for the third quarter was awaited with excitement on the platforms. The market intrigue was whether the Internet giant would be able to overcome the negative aspect of the decline in advertising volume and financial revenues from this side. So:

  • revenue of $4.47 billion (+2% YoY), above forecasts;
  • EPS $2.37, above expectations of $2.15-2.20;
  • search engine revenue of $3.55 billion;
  • EBITDA margin of 27%, a slight increase in quarterly comparison.

Among the strengths of the reporting, we can note an increase in business efficiency, the growth of cloud services, which is reflected in financial flows, as well as more confident figures in key areas.

Naturally, it is worth paying attention to the fact that Baidu owes its revenue growth to online marketing, not to the advertising stream.

Baidu Core (search engine) and Baidu Al Cloud (artificial intelligence-based service) are a strong support. In addition, technological and intellectual solutions are penetrating deeper into everyday life: in the transport sector, they have already been implemented in 63 cities.

The company has adjusted well to the changed economic and financial conditions, which makes its securities interesting to buy.

The consensus forecast for Baidu shares is $130 in the 12-month perspective.

On the daily chart, the MACD indicator is growing in the negative zone and signals a purchase. The Stochastic oscillator remains in the overbought zone and keeps the buy signal in force.

23 November 2022
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