Baidu Revenue Over Expected Stock Price Rise Analyst: Resist the Headline Attack

 Baidu Revenue Over Expected Stock Price Rise Analyst: Resist the Headline Attack

Netease Technologies News, August 20, reported that after the closing of the U.S. stock market on Monday, Baidu announced its second quarter results for the year ended June 30, 2019. According to the financial report, Baidus revenue in the second quarter was RMB 26.33 billion ($3.84 billion), up 1.4% year-on-year, which exceeded analystsexpectations of RMB 25.77 billion, while its net profit attributable to the company was RMB 2.41 billion ($351 million), down 62% year-on-year.

Baidu has been slow to respond to the growth of mobile business and faced increasingly fierce competition from new entrants such as byte bouncing, so advertisers have shifted their budgets to other platforms.

Xueru Zhang, senior analyst at Shanghai 86 Securities Research Co., Ltd., said: This is a structural change that is not conducive to Baidus core search business.

The release of the second quarter results shows that Baidu has successfully maintained its advertising business by withstanding the challenges from its rivals such as byte bouncing.

Robin Li, chairman and chief executive of Baidu, said that thanks to the rapid development of the business such as 100 and intelligent small programs, Baidu mobile ecosystem has become more prosperous. This has brought us not only a strong traffic growth but also the number of partners.

There is a so-called super application trend in the Chinese market. These products include WeChat of Tencent or Alipay of ant gold suit, etc. users can complete a series of different operations from point meal to payment in an application.

Baidu has been investing heavily in its mobile products. It allows users to search and watch videos, and has many other functions. The company announced last week that it has more than 200 million active users a day.

Baidu has also introduced smart widgets and other in-house applications for its mobile applications, in order to increase userstime spent on the application. But Zhang Xueru said Baidu came too late. Baidu is just a follower, and the market has not given too much trust to these initiatives, she said.

Investors are worried that Baidu, which has been 19 years old, is losing momentum as the Chinese Internet moves from desktop to mobile. Competitors such as byte bouncing are increasingly eroding Baidus core advertising sales through popular news and social media applications. Byte bouncing has also recently launched a general search engine, which poses a direct challenge to Baidus core business.

But in any case, better-than-expected earnings will ease investorsconcerns. Bloomberg analysts Vey-SernLing and Tiffany Tam said Baidu avoided being squeezed into the dilemma by byte bouncing because of years of search engine development, 174 million active users per day and a strong content ecosystem.

Baidu has shifted its focus to AI products, including its driverless Automotive Technology Division and voice assistants.

Robin Li has said before: we are using Baidu artificial intelligence to provide enterprise and local governments with enterprise solutions, which has greatly expanded our overall target market.

Although 2019 seems to be a painful year for Baidu, the market expects Baidu to recover by 2020 as some of these initiatives start to make profits.

Its new initiatives in areas related to artificial intelligence are actually growing very fast, said Zhang Xueru. Although new AI projects are unlikely to bring meaningful financial contributions in the short term. But the company has proved that it has the ability to commercialize AI technology in a wide range of applications, and its speed and scale make it difficult for other companies to compete. Her company believes that Baidu is a key player in the coming era of artificial intelligence in China, and adds that these new AI businesses will be the long-term value drivers of Baidu.

Baidu shares rose more than 8% in after-hours trading after the results were released.

Baidu was once crowded out of the top five Internet companies in China after its market value shrank by more than 40% this year, ranking behind Mayfair Corps and Netease. (Chen Chen)

Source: Responsible Editor of Netease Science and Technology Report: Wang Fengzhi_NT2541