Now Is The Time To Buy Baidu Stock At A Bargain

  • Baidu dominates Google's final unconquered territory.
  • Baidu's prospects are interlinked with China's economic prosperity.
  • Baidu stock presents a good opportunity for brave investors to buy low and sell high later.

Despite the fact that Alphabet Inc-C (NASDAQ:GOOG) is a global company, there is one key market which Sundar Pichai and co haven't been able to dominate. I am of course talking about China. With approximately 20% share of the world's web surfing population, Google's lack of access to this region is a thorn in their side.

Baidu (NASDAQ:BIDU) has a set-up similar to its Western rival. They diversify their interests, account for 70% of the Chinese search engine market, and even have their own solution to the autonomous car industry.

If Baidu were to be in Europe, investors would have been wrestling to invest. However, Baidu's prospects are interwoven into the fabric of the Chinese economy. And after China enjoyed the limelight of being the world's fastest growing economy and the 'world's factory', growth is slowing and the baton has been passed on to India.

China's economic situation has gotten so desperate that their government has had to enforce special measures. For instance, there have been limits placed on overseas purchases, and money which can be moved out of the country ($10000). Moreover, propaganda campaigns are being used to downplay the economic situation. If consumer spending reduces as a result of reduced confidence in the economy, China risks dipping into a recession.

This is the crossfire which Baidu finds themselves in.

Baidu Stock Shoots Up Over Qiyi

Baidu stock enjoyed a surge in demand after receiving an offer to buy their 80.5% stake in online video platform iQiyi. The deal is estimated to be worth $2.25 billion. The costs of running iQiyi are high, and investors hope that the deal going through would mean a reduction in Baidu's expenses going forward. Interestingly, Baidu is such a heavyweight in China that iQiyi would 'have to' form some kind of partnership.

Despite the news which sent Baidu's stock skyrocketing by 8%, things aren't looking too great. You see, Baidu's stock has suffered a drop of 19.21% year-to-date and after entering 2016 with a bang at $187 (January 5th), the stock has dropped to $152.73 as of writing. It is worth noting that this is partly due to a cornucopia of geopolitical and economic factors in China.

BIDU stock chart

Source: Baidu stock price chart by

However, the company has some strengths which could provide investors with impressive returns once the Chinese economy bounces back.

For instance, like their American counterpart, Baidu is developing their own range of autonomous vehicles. Plus, due to the comparatively lax laws in China, Baidu are likely to bring the vehicles to a mass market sooner than Google, and potentially sell the technology to car manufacturers. It is also worth noting that autonomous technology provides heavyweights like Baidu with more opportunities to serve ads, and plugin some of their own services.

For instance, Baidu dominates the online to offline sector in China. And autonomous cars are likely to provide more opportunities to increase revenue in this area, or even create new streams of income.

Notably, Baidu generally outperforms competitors with regard to revenue growth, a fact which is clearly highlighted in Amigobulls' Baidu stock analysis. Top financial services establishments such as Morgan Stanley, Goldman Sachs and TheStreet are bullish on Baidu stock.

Baidu stock price is down by 19.21% year-to-date (YTD) against a plunge of 13.4% and 8.8% in the NASDAQ and S&P 500 Index, respectively. The company’s shares have an average daily trading volume of 3.73 million and a 52-week range of $100-223. In 2016, Baidu stock price hit a high of $187 on January 5 and a low of $140 on February 9. Baidu stock closed the last trading day (February 12) at $152.73.


Investors looking to buy Baidu will have to gamble on the Chinese economy getting back on track. It is worth noting that the Chinese government have a very tight leash on the country, and will use their powers to get everything back on track. China is highly unlikely to slip into a recession.

Investors willing to roll the dice now will reap the rewards when Baidu stock price shoots up after the cloud of uncertainty lifts.

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Author's Disclosures & Disclaimers:
  • I do not hold any positions in the stocks mentioned in this post and don't intend to initiate a position in the next 72 hours
  • I am not an investment advisor, and my opinion should not be treated as investment advice.
  • I am not being compensated for this post (except possibly by Amigobulls).
  • I do not have any business relationship with the companies mentioned in this post.
Amigobulls Disclosures & Disclaimers:

This post has been submitted by an independent external contributor. This author may or may not hold any positions in the stocks discussed. Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. Amigobulls has not verified the author’s positions in the stocks discussed, and does not provide any guarantees in this regard. The author may be paid by Amigobulls for this contribution, under the paid contributors program. However, Amigobulls does not guarantee the authenticity or accuracy of the information provided by the author in this post.

The author may not be a qualified investment advisor. The opinions stated in the post should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions.

Amigobulls does not have any business relationship with any of the companies covered in this post. This post represents the views of the author/contributor and may not reflect the views of Amigobulls.

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Comments on this article and BIDU stock

That all depends on who gets elected, if Trump wins he will renegotiate the trade deal with China, and that could be very bad for china, because even though they can make items cheaply, if they don't agree with the new Presidents deal it could be a risky stock. I would wait until after this election before I pulled the trigger on this one.
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