Baidu’s Shares jump up after second quarter earnings that beat expectations

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Baidu shares Tuesday rose over 8% after the Chinese online-search engine posted impressive earnings for the second quarter 2019. Some analysts think the shares can go up further.

At least four analysts increased their target price after the company announced their earnings while two decreased their target. The average target price for the next 12 months is about $143, according to 30 analysts polled by Bloomberg. Since this year until August 16, Baidu shares were down almost 40%. The stock surged 7.8% on Monday and went up another 7.2%, then surged over 8% in U.S. after-hours trade after it reported earnings for the second quarter that beat market expectations

Here are second quarter summary:

Revenue of 26.3 billion yuan, or $3.83 billion, according to the exchange rate published in the company’s earnings release. That represented a 1% year-on-year increase or 9% on the quarter. Revenue beat market expectations of 25.76 billion yuan.

Earnings per share of 10.11 yuan, beating estimates of 6.12 yuan. That was a 54% year-on-year decline but a more than 260% increase from the previous quarter.

Baidu’s core advertising and marketing services generated revenue of 19.5 billion yuan, decreasing 2% year-on-year but rising 12% on the quarter. Given that this makes up around three quarters of the company’s revenue, this is a positive development.

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The search giant posted a strong growth for its own mobile app. Daily active users for the app reached 188 million in June, growing 27% year-on-year. In-app search queries grew over 20%.

Baidu’s streaming service iQiyi also posted subscriber numbers of 100.5 million in June 2019, increasing 50% year-over-year.

But Baidu still has areas to work on.

“I would say this quarter’s results are just ‘less bad’ or better than investors feared,” Xueru Zhang, senior analyst at 86Research, told CNBC. “The ad market still shows no signs of recovery. What Baidu can do is to improve its own products.”

“At least (the) topline performance stabilized (in terms of) quarter-on-quarter growth, while year-on-year remains challenging in the second half of 2019,” Zhang added.

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