Investors Finding Potential in Top Chinese Search Engine Baidu

As far as Chinese technology stocks go, Baidu (BIDU) is one of the most oft-considered stocks out there. Often called the “Google (GOOGL) of China,” Baidu remains a top pick Read More... The post Investors Finding Potential in Top Chinese Search Engine Baidu appeared first on TipRanks Financial Blog.

Investors Finding Potential in Top Chinese Search Engine Baidu

As far as Chinese technology stocks go, Baidu (BIDU) is one of the most oft-considered stocks out there. Often called the “Google (GOOGL) of China,” Baidu remains a top pick for growth-hungry tech investors looking outside of America for growth in this arena.

Indeed, Baidu has been quite the growth gem for investors over the past year. One year ago, investors could buy BIDU stock for around $100 per share. Today, that number is closer to $200 per share.

However, the kicker is – BIDU stock went up to nearly $340 per share earlier this year. As tech has broadly sold off, BIDU stock has become very attractive at these levels. (See Baidu stock analysis on TipRanks)

Here are some reasons Baidu deserves another look from growth investors today.

Extremely Attractive Business Model

Returning to Baidu's comparison with Google, Baidu’s core legacy business as the dominant search provider in China generates a significant portion of the company’s earnings.

Baidu’s market share of 70-80% in the Chinese search market gives it a near-monopoly in a hyper-growth market. With China’s economy expected to surpass that of the United States at some point this decade, one could argue that Baidu’s core business is much more enviable at these levels than Google’s. If the runway of economic growth in China is as good as many economists predict, Baidu’s growth rate in this segment could theoretically be double that of Google for decades.

Moreover, it turns out that search is just one of many businesses under the Baidu umbrella. The company is a broad conglomerate of businesses ranging from AI to electric vehicles (EVs).

Baidu’s portfolio of AI patents is the largest of any company in China. Additionally, its EV segment has been a source of speculative fervor, as other EV stocks took off earlier this year. The company’s announced partnership with auto manufacturer Geely to enter this market took this stock on a nice ride.

These catalysts are still as strong as ever today. One might then wonder – why the sell-off? Well, there’s one factor in particular to consider right now.

Archegos Margin Call Led to Technical Correction

The recent movements in Baidu stock aren’t 100% natural. That is, a margin call accounted for the majority of the early drop in this stock a couple months ago.

The infamous Archegos Capital margin call sent a number of Chinese stocks tumbling. It turns out that Archegos owned a large stake in companies such as Baidu. Therefore, Archegos' block sale of stocks sent these companies' shares cascading downward. 

Regrettably, Baidu stock hasn’t recovered from this mess as of yet. Shares continue to trend downward following this technical correction. It appears the momentum trade is in full swing today, and unfortunately for growth investors, momentum works in both directions.

Where to Go From Here?

Given the main explanation for its sell-off, Baidu represents a compelling growth opportunity.

Looking back, we can see that BIDU stock is trading at 2014 levels. For a stock with this much long-term growth potential, this company seems like a steal right now.

Analysts agree. The average analyst price target for BIDU stock right now is $351.27, implying upside potential of 88.6%. The stock's consensus rating is a Strong Buy, based on 15 Buy and 2 Hold ratings.

Given its potential, Baidu just might hold vast opportunity for investors looking for growth.

Disclosure: Chris MacDonald does not have a long or short position in Baidu stock.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.

The post Investors Finding Potential in Top Chinese Search Engine Baidu appeared first on TipRanks Financial Blog.

Source : Tip Ranks More   

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Palantir Stock: This One Could Require Some Patience

Palantir Technologies (PLTR), which is a top provider of analytics and AI (artificial intelligence) services and technology, saw its stock drop ten days in a row prior its earnings report Read More... The post Palantir Stock: This One Could Require Some Patience appeared first on TipRanks Financial Blog.

Palantir Stock: This One Could Require Some Patience

Palantir Technologies (), which is a top provider of analytics and AI (artificial intelligence) services and technology, saw its stock drop ten days in a row prior its earnings report this past week.

Of course, this is nothing new for high-growth stocks lately. Wall Street has been dumping most of these securities.

Palantir stock did get some relief when it reported its Q1 results on May 11. On the news, shares jumped nearly 10% to $20.21. 

Yet it was not able to hold on, and the stock price has since sunk to around $20, bringing the market capitalization to $37 billion.

Q1 Results

So, let’s get a rundown on the Q1 numbers. The company reported a net loss of $123 million or 7 cents a share. On an adjusted basis, the earnings per share was 4 cents, which was in-line with the consensus forecast. 

As for revenues, they soared 49% to $341.2 million, which handily beat the Street estimate of $332 million. The biggest driver was the U.S. government business, which saw an 83% spike. (See Palantir Technologies stock analysis on TipRanks)

Note that when Palantir was founded – back in 2003 – the focus was generally on contracts for the CIA and the Defense Department. However, over the past decade, the company has been moving more aggressively into the commercial sector. In Q1, commercial segment revenues were $133 million.

Something else to consider about the quarterly results: Palantir said that it will accept Bitcoin from its customers and might even add this digital asset to its balance. As seen recently with Tesla (), this may prove to be a challenge. Tesla recently indicated it will no longer accept Bitcoin for orders because of concerns about the environmental impact of the digital mining.

Palantir's Technological Advantage

Palantir generally caters to larger enterprise customers, as the average revenue per customer is about $8.1 million. In fact, the top 20 customers are at a hefty $36.1 million.

Additionally, the company has been able to scale its operations with proprietary technologies. The latest offering is Apollo for Edge AI. Launched in April, it is already getting traction. At the heart of this system is micro models, which are similar to microservices that allow for modern cloud computing. The technology essentially makes it much easier and more effective to deploy AI models across complex environments. 

This technology holds enormous potential. For example, it can allow for the automation of factories, the use of sensors on oil rigs or even applications in space. All in all, Apollo for Edge AI should expand the company’s addressable market opportunity.  

Wall Street’s Take

Turning to the analyst community, the consensus rating is a Hold, with 2 Buys, 3 Holds and 4 Sells logged over the past three months. The average analyst price target is $21.75, which implies 8.3% upside potential.

Bottom Line on Palantir

Palantir has built a powerful platform and is positioned to benefit from the secular trend of AI. Few companies have a similar level of experience, set of strong technologies and team of data scientists.  

On the other hand, in today’s environment, Wall Street is not particularly interested in growth plays – especially those with high valuations. Consider that Palantir is trading at about 17 times sales, even with the recent drop-off in the stock price.

Therefore, it may be best to hold off and wait for things to settle before making a purchase.

Disclosure: Tom Taulli does not have a long or short position in Palantir stock.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.

The post Palantir Stock: This One Could Require Some Patience appeared first on TipRanks Financial Blog.

Source : Tip Ranks More   

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