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Baidu's Market Value Is Only About One-Tenth Of Tencent And Alibaba. What Happened?

|About: Baidu, Inc. (BIDU), BABA, Includes: TCEHY
Summary

After the drop on Friday, Baidu's market value is only about one-tenth of Tencent and Alibaba.

Intensified competition on performance ad is the key reason. Unlikely to change.

Watch out marketing and channel spending for Baidu Core.

The China stocks listed in the US closed lower, which was dragged down by the first operating loss since the listing, plummeted 16.5%.

After the plunge on Friday, Baidu's market value was only about one-tenth of Tencent Holdings (0700 HK) and Alibaba(BABA US).

Baidu announced on Thursday that as of the end of March this year, revenue was 24.1 billion yuan, an increase of 15% year-on-year, but the net loss reached 327 million yuan, higher than market expectations. In addition, Baidu’s revenue forecast for the second quarter of this year is 25.1 to 26.6 billion yuan, and the news is obviously unfavorable to stock price performance.

 The scary earning outlook is driven by the industry-wide surge in performance ads inventory, especially from the competition of ByteDance. Baidu’s move to structured data has not driven growth of its core search/feed business. Both factors tend to continue in the coming 2 quarters.

I would put additional attention on :

(1) Intensified competition in the online advertising market that lead to further pricing pressure.

(2) marketing and channel spending for Baidu Core

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.