| Stock (Symbol) | Stock Price | |
Baidu.com (BIDU) |
$140 |
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| Data is as of | Expected to Report | Sector |
August 23, 2013 |
Oct 28 – Nov 1 |
Technology |
| Sharek’s Take | ||
 Baidu has shot from $85 to $140 since last quarter. Why? First the Chinese bear market is over and the top Chinese stocks are hot. Second, Baidu just bought PPS, the YouTube of China, and 91 Wireless Websoft, wireless experts. So the company is going to be better at videos and wireless content, great news. But from $85 to $140? I think that was too big of a move, especially considering Qihoo 360 has taken around 17% market share with its search engine in only a year. My guess is Baidu had 80% of the market, now it has 60%. By next year it could be 50%. Still the market is growing rapidly, BIDU had a 33% increase in the number of online marketing customers last quarter. |
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| One-Year Chart | ||
 The first thing I notice from this chart is the spike the stock just made. The second thing is profit growth is meh. 2013 is a year of transition for Baidu, as it spends to get its wireless advertising working. That’s holding back profits. BIDU is worth around 20 times earnings, and the P/E’s gone from 17 to 28 since last quarter. |
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| Earnings Table | ||
 BIDU’s sales jumped 44% last quarter, slightly better than the 42% 2QtrsAgo. Profits were down 2% to to R&D spending.Wow, the stock missed estimates. It’s not even beating. People are buying into the future (hype?). Annual Profit Estimates have stopped declining. And that’s a slight positive. Profit growth looks to return net year. |
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| Fair Value | ||
 Last quarter I took the Fair Value P/E from 25 to 20 and the stock then rose until its P/E went from 17 is 27. I still think the stock is high here. I think the run is done. For now. |
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| Ten-Year Chart | ||
 What’s bad on this ten-year chart is profit growth is expected to be only 5% this year. What if the company continues to invest for the future and only has 5% growth next year too? I think I like Qihoo 360 better, its taking market share and is a smaller company that will really benefit from the new profits. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
18 of 24 |
Baidu has gone on a run, and I think that run is done. The company is spending to get into video and wireless and that’s zapping profits right now. Sure, the future looks great, but the move from $85 to $140 was too far, too fast. |
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Aggressive Growth Portfolio
N/A |
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