One of the most frustrating issues when investing in a Chinese technology stock is the constant cloud hanging over them. That cloud is the Chinese-run government. I have completely abandoned investing in the intermediate or long-term with Chinese technology stocks such as Baidu (BIDU), Sina Corp. (SINA), RenRen (RENN), Youku.com (YOKU), and many others.
Other than solar energy stocks, Chinese internet technology stocks have been hit extremely hard over the past year. Check out some of the sanctions the Chinese government has brought down on Baidu in the last year alone: Chinese government promises to punish Baidu for music downloads; China TV (government-run) stepsup attack on Baidu, alleging that Baidu is negligent in checking up on drug advertisers; Chinese government attempts to censor online access after tax riots.
Baidu, Inc. provides Internet search services. The company offers a Chinese language search platform on its Website, Baidu.com; and a Japanese language search platform on its Website, Baidu.jp. Its search services enable users to find relevant information online, including Web pages, news, images, documents, and multimedia files through the links provided on its Websites.
Baidu is currently trading at $114.52/share. The 52-week range is $94.33 - $165.96.
| 52-wk high: | 165.96 |
| 52-wk low: | 94.33 |
| EPS: | 2.03 |
| PE: | 56.30 |
| Div Rate: | N/A |
| Yield: | N/A |
| Market Cap: | 39.97 B |
| Volume: | 8.99 M |
I use Baidu in my daily options trading strategy, but this is the only way I will trade this stock. There should be no reason why Baidu is trading at just over $110.00/share.
Simply take a look at what Baidu's stock has done after their last three earnings releases, which I have added below. Interestingly, there is always a quick spike up in price, but it eventually starts sliding precipitously after that. The strange thing about this is that it is not because they are reporting bad numbers. In fact, Baidu always does extremely well. This is usually due to some Chinese government sanction, policy, or other detrimental news stories that continue to derail this stock.
Baidu released its third-quarter earnings on October 27, 2011.
| Date | Open | High | Low | Close | Volume |
|---|---|---|---|---|---|
| Dec 16, 2011 | 114.48 | 116.17 | 110.90 | 114.52 | 8,988,469 |
| Dec 15, 2011 | 119.11 | 119.29 | 110.69 | 114.34 | 10,196,173 |
| Dec 14, 2011 | 120.03 | 120.20 | 115.82 | 117.97 | 7,148,053 |
| Dec 13, 2011 | 127.89 | 128.38 | 121.66 | 122.22 | 6,812,346 |
| Dec 12, 2011 | 128.54 | 128.80 | 125.25 | 127.65 | 4,122,673 |
| Dec 9, 2011 | 126.71 | 131.00 | 125.56 | 130.52 | 4,770,547 |
| Dec 8, 2011 | 128.37 | 130.38 | 126.37 | 126.63 | 3,919,020 |
| Dec 7, 2011 | 130.53 | 131.50 | 127.26 | 129.33 | 3,526,395 |
| Dec 6, 2011 | 134.22 | 135.48 | 130.03 | 131.25 | 4,556,868 |
| Dec 5, 2011 | 136.44 | 137.21 | 133.80 | 134.63 | 4,423,085 |
| Dec 2, 2011 | 136.49 | 136.63 | 133.64 | 134.09 | 3,485,449 |
| Dec 1, 2011 | 130.15 | 135.99 | 130.10 | 134.83 | 5,195,538 |
| Nov 30, 2011 | 131.31 | 131.65 | 129.10 | 130.99 | 6,119,368 |
| Nov 29, 2011 | 127.40 | 127.50 | 124.67 | 124.92 | 4,574,719 |
| Nov 28, 2011 | 125.45 | 127.68 | 123.61 | 126.81 | 6,409,607 |
| Nov 25, 2011 | 118.60 | 121.36 | 118.44 | 119.91 | 2,792,352 |
| Nov 23, 2011 | 119.55 | 119.55 | 119.55 | 119.55 | 0 |
| Nov 22, 2011 | 123.48 | 127.05 | 121.88 | 124.28 | 4,560,628 |
| Nov 21, 2011 | 123.36 | 124.82 | 118.00 | 124.17 | 8,812,979 |
| Nov 18, 2011 | 131.96 | 131.96 | 126.05 | 126.93 | 5,629,357 |
| Nov 17, 2011 | 137.79 | 137.99 | 128.93 | 131.10 | 7,514,820 |
| Nov 16, 2011 | 139.80 | 140.40 | 137.74 | 138.10 | 4,088,824 |
| Nov 15, 2011 | 138.02 | 141.35 | 137.64 | 140.74 | 5,227,105 |
| Nov 14, 2011 | 137.00 | 140.20 | 136.50 | 138.88 | 3,389,891 |
| Nov 11, 2011 | 137.39 | 138.22 | 135.00 | 137.76 | 3,593,442 |
| Nov 10, 2011 | 138.18 | 138.64 | 133.60 | 135.68 | 4,303,402 |
| Nov 9, 2011 | 139.50 | 140.25 | 135.73 | 136.17 | 5,561,624 |
| Nov 8, 2011 | 141.60 | 142.72 | 138.60 | 141.94 | 4,853,871 |
| Nov 7, 2011 | 142.66 | 143.89 | 139.60 | 140.78 | 4,215,272 |
| Nov 4, 2011 | 142.94 | 143.60 | 138.95 | 143.18 | 4,675,321 |
| Date | Open | High | Low | Close | Volume |
|---|---|---|---|---|---|
| Nov 3, 2011 | 142.82 | 144.94 | 140.00 | 143.50 | 6,303,390 |
| Nov 2, 2011 | 139.80 | 141.88 | 139.33 | 140.55 | 6,820,493 |
| Nov 1, 2011 | 133.37 | 136.99 | 132.80 | 135.05 | 6,995,205 |
| Oct 31, 2011 | 140.74 | 143.91 | 138.79 | 140.18 | 6,466,043 |
| Oct 28, 2011 | 145.00 | 147.68 | 142.64 | 144.62 | 13,959,191 |
| Oct 27, 2011 | 137.17 | 140.00 | 133.80 | 138.39 | 14,125,366 |
On July 25, 2011, Baidu released its second-quarter earnings:
| Date | Open | High | Low | Close | Volume |
|---|---|---|---|---|---|
| Aug 19, 2011 | 126.31 | 135.65 | 125.11 | 126.98 | 14,506,167 |
| Aug 18, 2011 | 132.00 | 133.37 | 126.61 | 128.77 | 14,249,518 |
| Aug 17, 2011 | 137.28 | 138.37 | 132.10 | 137.96 | 11,735,693 |
| Aug 16, 2011 | 138.56 | 139.46 | 134.37 | 136.92 | 17,193,132 |
| Aug 15, 2011 | 152.00 | 152.09 | 142.70 | 144.64 | 14,646,338 |
| Aug 12, 2011 | 151.64 | 151.98 | 149.35 | 150.15 | 7,496,815 |
| Aug 11, 2011 | 143.95 | 151.49 | 141.70 | 148.15 | 11,655,008 |
| Aug 10, 2011 | 140.56 | 145.99 | 138.25 | 140.79 | 12,165,570 |
| Aug 9, 2011 | 0.00 | 143.85 | 133.00 | 143.64 | 16,143,176 |
| Aug 8, 2011 | 132.10 | 137.00 | 128.77 | 130.45 | 14,081,282 |
| Aug 5, 2011 | 145.90 | 147.20 | 134.73 | 140.99 | 14,898,702 |
| Aug 4, 2011 | 148.55 | 149.59 | 143.41 | 143.92 | 9,657,317 |
| Aug 3, 2011 | 149.03 | 155.00 | 145.26 | 152.43 | 11,448,460 |
| Aug 2, 2011 | 158.29 | 160.80 | 152.58 | 152.92 | 7,743,622 |
| Aug 1, 2011 | 161.70 | 161.90 | 155.21 | 158.93 | 8,099,465 |
| Jul 29, 2011 | 154.93 | 158.46 | 152.34 | 157.07 | 9,803,772 |
| Jul 28, 2011 | 160.96 | 162.73 | 156.55 | 158.34 | 8,252,856 |
| Jul 27, 2011 | 163.50 | 165.89 | 159.50 | 161.24 | 9,793,157 |
| Jul 26, 2011 | 163.56 | 165.96 | 162.10 | 164.36 | 17,769,392 |
| Jul 25, 2011 | 153.32 | 157.90 | 152.76 | 156.54 | 12,332,563 |
On April 27, 2011, Baidu released its first-quarter earnings:
| Date | Open | High | Low | Close | Volume |
|---|---|---|---|---|---|
| May 20, 2011 | 135.57 | 136.33 | 133.85 | 134.69 | 5,854,374 |
| May 19, 2011 | 132.55 | 136.25 | 132.14 | 135.88 | 7,793,865 |
| May 18, 2011 | 132.88 | 133.71 | 131.33 | 131.84 | 6,456,636 |
| May 17, 2011 | 127.87 | 131.95 | 124.66 | 131.81 | 14,000,373 |
| May 16, 2011 | 129.07 | 135.50 | 127.36 | 127.77 | 12,905,451 |
| May 13, 2011 | 137.15 | 137.39 | 131.02 | 131.28 | 13,656,170 |
| May 12, 2011 | 137.71 | 139.27 | 135.65 | 138.20 | 6,914,633 |
| May 11, 2011 | 142.00 | 142.56 | 137.60 | 138.90 | 6,237,925 |
| May 10, 2011 | 143.42 | 143.69 | 140.57 | 142.24 | 5,433,353 |
| May 9, 2011 | 142.26 | 143.33 | 139.61 | 142.62 | 4,640,691 |
| May 6, 2011 | 142.50 | 143.51 | 140.55 | 141.26 | 6,630,308 |
| May 5, 2011 | 137.20 | 142.48 | 136.51 | 140.19 | 7,574,294 |
| May 4, 2011 | 138.76 | 141.85 | 134.28 | 139.01 | 13,977,593 |
| May 3, 2011 | 147.83 | 148.40 | 136.50 | 139.84 | 15,593,299 |
| May 2, 2011 | 149.93 | 150.50 | 147.11 | 147.47 | 5,966,920 |
| Apr 29, 2011 | 147.80 | 150.89 | 147.20 | 148.52 | 8,935,708 |
| Apr 28, 2011 | 151.47 | 156.04 | 146.35 | 148.25 | 17,182,088 |
| Apr 27, 2011 | 153.60 | 153.67 | 146.18 | 151.11 | 12,070,305 |
If there is one thing I do not like when investing it is uncertainty. While I view Baidu as a very stable company that should be trading much higher than it is right now, I cannot recommend purchasing the stock or buying call options with the possibility of the next sanction completely depleting Baidu's share price. Yes, there is value with Baidu. However, there is a very high risk too.
If the numbers from their last three earnings releases and subsequent fall in share price in the following weeks prove anything, it is to be aware that more trouble is always on the horizon when the Chinese government is involved, and that it directly plays a major role in deciding how stocks like Baidu, Sina, Youku.com and others in the technology sector perform.
Baidu's next earnings release is scheduled for January 30, 2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
