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Baidu And Bilibili Are In The News - One Exalted, One Condemned

ALT Perspective profile picture
ALT Perspective


  • Technology and internet stocks continued their tumble for the third consecutive week on inflation worries and a rise in U.S. Treasury yields.
  • Latest cooperation agreements vindicated Baidu's long-standing investments in AI technologies, cloud computing, and big data capabilities.
  • ARKK ETF made a rare sell trade on Baidu but it was still the fifth-largest holding of the ARKK ETF as well as the combined ARK Invest ETFs.
  • Bilibili was accused of a series of "out-of-control misogyny" practices though the allegations failed to take the wind out of its sails.
  • Not content with its original appeal to the niche anime, comics and games subculture, Bilibili is seeking to expand its revenue streams in advertising and e-commerce.

By ALT Perspective for Chinese Internet Weekly

Readers of this column who are vested in internet stocks and have not checked your portfolio performance for the past week are likely not going to like this update. Those who have waited patiently on the sidelines or wishing to add on to their holdings, however, might relish the opportunity to buy the stocks on their watch list with the pullback.

The representative ETFs of Chinese companies (NYSEARCA:CQQQ)(NYSEARCA:FXI)(NASDAQ:MCHI) declined 0.5 percent to 3.8 percent even as their U.S. counterparts (QQQ)(DIA)(SPY) returned a mixed performance. The Chinese Internet sector representative ETF, the KraneShares CSI China Internet ETF (NYSEARCA:KWEB), suffered the most relative to the broader Chinese ETFs. It sank 5.5 percent for the week.

While the Invesco China Technology ETF is more diversified in terms of sectors than the KWEB ETF, it was dragged down by its top holding, Baidu Inc (NASDAQ:BIDU), which declined 7.7 percent. With the fat year-to-date gains the leading Chinese search engine and artificial intelligence firm had chalked up, it seemed shareholders were keen to lock in the profits or chose to use the sale proceeds to invest in more heavily beaten-down names.

Either way, it wasn't an easy decision. The long-anticipated secondary listing of Baidu is finally within reach. Bloomberg reported Friday that the stock exchange of Hong Kong had approved the dual-listing application and investor orders could begin as early as this week.

This would have been a highly positive boost to the share price in an ordinary week. U.S.-listed Chinese stocks have been depressed by the delisting threat due to the heightened U.S.-China political tensions and the passing of The Holding Foreign Companies Accountable Act. An alternative trading option meant that shareholders would not be stranded.

Another piece of good news failing to stem the loss in

This article was written by

ALT Perspective profile picture
I am honored to have been categorized as a 5-Star financial expert and ranked among the top 2% of financial bloggers on TipRanks in 2017/18. For a period, I was among the top 3 “Opinion Leaders” for Insider Ownership and Services, as well as top 5 for Long Ideas and Fund Holdings. I am an avid reader of market news and company publications with the aim of improving my investment acumen. I enjoy expressing my findings and opinions through writings. My appreciation and understanding of business strategies improved to a whole new level since completing an MBA (Distinction) from a FT100 MBA school. I have worked in companies with businesses that span multiple industries, according me with the exposure to a myriad of sectors.Check out my Author's Picks and over 190 Editor's Picks, among the highest in Seeking Alpha, if not the most.

Analyst’s Disclosure: I am/we are long BABA, BIDU, JD, NTES, TCOM, TCEHY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (32)

kthor profile picture
Why is BILI up today? news?
Why is Bili still dropping? It just had a spectacular earnings report, not just good but spectacular. Do fundamentals even matter anymore?
@rammbler65 I really suspect there are serious market manipulation about Chinese stocks in general.
ALT Perspective profile picture
@rammbler65 We can replace "Bili" with many Chinese stocks and your question is still valid!
AI is the future. BAIDU is building cloud AI and providing AI as a service, the first, I believe in the world. With the AI project with power grid company, the potential is endless. Then, the autonomous vehicle project. With 2x PE, it is a cheap long term growth stock to own.
Go long won’t go wrong
Long live $BABA & $BIDU
Allinvestor profile picture
Baidu getting back to value territory at c. 20x forward earnings...
superartus profile picture
@Allinvestor yeah I don't know why this was hurt so much i mean it's basically a value stock now.
Allinvestor profile picture
@superartus it used to be for the past 2-3 years as the Core Marketing business is losing market share in the advertising space to Tencent, Alibaba etc. until the EV/AV induced hype at the beginning of this year. At current valuation levels the stock is becoming interesting again I think - but it will be key to closely monitor the Core Marketing business for signs of further deterioration (especially in terms of cash generation) as it will take a while for the more promising AI/Cloud/AV segments to become the majority of the business.
Thanks once again
Any comments on China in general? As in wtf is happening? I get that braids ran too hard too fast, but man...I’m getting killed across the board in china stocks...
ALT Perspective profile picture
@Total Returns I’m getting killed across the board in *both* US and global stocks...
@UNCLEJUNIORSOPRANO, my best guess is that people are selling their profitable positions and Baidu is one of the biggest risers in the last couple of months.

The news on the company itself has only been positive for some time. I've personally bought each dip and still have very high conviction. BIDU and BABA seem like a real bargain right now.
@tarmo.tamm, on Baba you might be right, and maybe not. No one knows where the price is going on any stock. But for the price to go up, there needs to be positive investor sentiment. The is not much positive sentiment there and is out of favor with the CCP and big fund managers. I believe investors have a good 5 years to build a position in Baba before there is any breakout in the stock price. Consider Amazon, in 1999 it traded as high as $100. 10 years later it traded as low as $70 and it was a much better business in 2009! Baba could be, and I expect, it will be similar. It’s a great business and has huge growth potential, but the growth potential is not realized yet when you consider how big their opportunity is. The CCP may also curtail that opportunity in the name of market fairness and competition. For now, there is better value elsewhere and Baba can always be bought when the picture is clearer.
Nikolai Galozi profile picture
@Bankable Price prediction is impossible. You´re right on that one. But i do think that comparing BABA 2021 to AMZN 1999 (right before dotcom) seems very off looking at fundamentals - sure BABA has got a lot of growth ahead of them but they are very profitable in the moment too. Short-Term sentiment on BABA is terrible and historically that has always been a good buying point for a terrific company. To be waiting for a clear picture means waiting for other investors to pour in before you.

I felt the same on INTC (where it wasnt clear, they would be any kind of competition to AMD - in retrospect a silly argument looking at total Revenue and earnings) about 6 months ago, FB right now too and BABA most certainly.

Ive been owning Bidu since the 130´s last year and view it as a multi-year turnaround because i like their core-business and growth opportunities - EV is a nice cherry on the cake.
RealFin Capital Partners (Pty) Ltd profile picture
Thank you for your articles. I share your views and find your insight useful. The recent sell off in China tech makes no sense at all. Rising rates in the US (the ROW is way behind) has zero to do with the fundamentals as they relate to the Chinese tech giants. China setting a growth target of 6% underwhelms markets (apparently) - everyone knows they are being conservative and let's be honest with an economy that size 6% is just phenomenal. That economic growth coupled with the forecast of online consumers over the next 5 years is spectacular. Sure, some tech stocks still have high PEs - I think they are warranted - but look at Alibaba! It is literally on sale! What is your take?
@RealFin Capital Partners (Pty) Ltd, it's interesting to note that China's 10-year government bond has been above 3% since last summer.
ALT Perspective profile picture
@RealFin Capital Partners (Pty) Ltd Thank you for your kind words. I suppose since tech everywhere is being sold down, China tech names are no exception.
Thank you for your informative article as usual. During the pullback for last two weeks, I have built my full positions in Bidu and Tencent. Thank you for your analysis about Bilibili in this article. I think Bilibili will be a fantastic company to watch after Bidu.
ALT Perspective profile picture
@Stonerose You are welcome. I like Bili as a user too late as the stock already flew from late last year. Now it seems to be giving us bystanders a chance to get in.
Nice opportunity to pick up KWEB and CQQQ last week... US investors are seriously underweight Chinese stocks.
Thank you for your excellent article as usual.
I believe the stock markets in many countries, certainly in the US and China, were too overstretched, so a correction was expected in both cases. Take the Chinese EVs stocks (I am long LI and XPEV), for instance. Even Baidu (BIDU) which I have been holding for a long time (actually, it is the top holding of my global portfolio) had had a parabolic move, to a certain extent. Not to mention ZK International Group (ZKIN) which I also hold for the long term.
Looking forward to your next article.
Good luck for all!
ALT Perspective profile picture
@miquemi Thank you for your kind words. Thanks for sharing!
I see you like XPEV, LI and BIDU, ditto here, but why not GELYF, since this EV manufacturer is partnered with BIDU?🤔
You are absolutely right. Possibly Geely is a safer bet. I guess it is not as expensive. XPEV as you probably know is backed by Alibaba. Just as NIO is backed by Tencent, but I am not totally sure right now.
Thank you for the article!! 👍🏻 Long Baidu!! The best is yet you come!! 😀👍🏻💰💰
ALT Perspective profile picture
@jeremymlynch You are welcome! Thanks for reading, GLTU!
FirstFIREWealth profile picture
Long BILI, brother
ALT Perspective profile picture
@Investing4FIRE Thanks for leading the comments stream. Good luck!
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