Baidu share price in blaze of glory

On 24 January 2019, it was reported that Microsoft’s search engine, Bing, was temporary inaccessible. There were market speculations that Bing might have been blocked by China’s Great Firewall, presumably due to the strict Chinese authorities censorship over online content. The latest development came after Google’s exit in 2010 and blockage of other US social media such as Facebook and Twitter. The ban of foreign search engines gave Baidu the golden opportunity to further entrench its market leadership in the China’ search engine space. But will Baidu share price continue to bask in the blaze of glory?

According to data from Analysys, Baidu’ search business represents 71% of China’s internet search market share as of December 2015. With Google exit from China, Baidu had apparently ruled the Chinese search engine market with no worthy competitor in sight. As a result, Baidu share price stormed from USD40 in 2010 to US263 in 2018. That was a mighty six-fold increase of Baidu share price within 8 years.

Baidu share price

However, like many technology stocks, Baidu share price suffered a devastating rout since middle of 2018. Obviously, the unfolding trade war between US and China had rattled Baidu share price. Indeed, for the past six months, Baidu investors cannot sleep well as Baidu share price collapsed from USD263 to USD163. Should investors run for their lives?

Beyond looking at the short-term volatility of Baidu share price, there is a dark side to Baidu’s growth strategy as it embarks on an aggressive Artificial Intelligence (AI) journey. In this article, I will share my insights on my hesitance in investing in this stock.

Baidu set to conquer China search engine market

Most people may think that the reason why Baidu is able to displace Google’s market position in China is due to the government’s intervention. Actually, such perception may not be true. In comparison to Google, Baidu is more aggressive when it comes to marketing its products and services. As of December 2017, Baidu had 12,392 employees in sales and marketing department. Fundamentally, Baidu sells its online marketing services through both direct sales teams and a distribution network.  Currently, Baidu has a direct sales presence in Beijing, Shanghai and major cities in Guangdong province while leveraging distribution networks in lower-tier cities.

Similar to Google, Baidu generates revenues mainly from [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: January 28, 2019 — 7:17 am

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