Baidu’s share price rose to the $200 mark, can the market value return to its peak?


Baidu’s share price rose to the $200 mark, can the market value return to its peak?

Since December, Baidu’s stock price has ushered in a sharp rise. Among them, Baidu’s stock price rose 14% last Tuesday, and its market value exceeded 60 billion US dollars after the news that Baidu and Geely Automobile and other car companies were initially approached to form an electric vehicle joint venture. This is also after April 12, 2019, Baidu’s market value returned to $60 billion again.

In the past three years, Baidu’s stock price peaked at $284.22 (market value is close to $100 billion) on May 16, 2018. On May 18 of the same year, Baidu announced the resignation of its then-president Lu Qi, and the stock price has fallen since then.

Baidu’s stock price chart in the last three years (Source: Sina Finance)

In March this year, Baidu’s share price fell to $82, with a market value of less than $30 billion, and was surpassed by companies such as Meituan and Pinduoduo.

In the past few years, the problem Baidu has faced is that the growth rate of search revenue has slowed down, and the revenue contributed by the AI ​​business has been very limited. In the first quarter of 2019, Baidu also posted its first loss since going public in 2015. This year, due to factors such as the epidemic and the macroeconomic situation, Baidu’s revenue growth slowdown still exists. The latest financial report shows that Baidu’s total revenue in the third quarter was 28.2 billion yuan, an increase of 1% compared with the same period last year and an increase of 8% compared with the previous quarter.

This makes the market’s attitude towards Baidu somewhat pessimistic.

However, some analysts believe that Baidu, as a company with an annual revenue of 100 billion yuan, and with cash, cash equivalents, restricted cash and short-term investments totaling more than 100 billion yuan, should not have a market value of more than 30 billion US dollars.

An important reason for Baidu’s low market value is that the value of emerging businesses such as autonomous driving is not reflected in the market value. As Apollo autonomous driving has made more progress in business landing and commercialization, the value of this part of the business is gradually emerging.

On December 11, a report released by UBS, a well-known international investment institution, showed that Baidu’s intelligent driving business was valued against Waymo, and Apollo was valued at US$10 billion.

At the same time, UBS gave Baidu’s search + information flow business 9 times P/E, with a valuation of $37.7 billion; it gave the intelligent cloud business 6 times P/S, with a valuation of $7.6 billion. According to the latest round of financing of Xiaodu Technology and the proportion of Baidu’s shares, the valuation of Xiaodu intelligent assistant is US $ 2.6 billion; coupled with the investment and net cash of iQiyi, UBS gives Baidu a total valuation of US $ 92.4 billion. And Baidu’s stock rating was upgraded to “buy.”

UBS raised its forecast for Baidu’s core revenue and profit in 2021-2022. At the same time, UBS analyst Jerry Liu also said that Baidu management is likely to take action to help the company’s autonomous driving, smart cloud and Xiaodu Intelligence through stock listings, asset sales/divests and share buybacks. Assistant and other businesses realize value.

Baidu’s stock price rose one after another after the news that Baidu and Geely, Weimar and other automakers jointly built cars. On Wednesday, Baidu’s intraday share price once exceeded the $20 billion mark; as of the close of last Friday, Baidu’s share price was $192.69, with a market value of more than $65 billion.

Although the market value has risen by 12 billion US dollars in 7 days, Baidu still has a long way to go from its goal of 100 billion US dollars, and it still needs to rely on its performance to prove its value to the market.

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