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Baidu share price: what to expect from Q2 earnings

In this article, we take a look at how traders and brokers are placed ahead of the Baidu Q2 results release.

Baidu Inc, the second-largest search engine in the world (and largest in China) is set to release second-quarter (Q2) 2019 results after close of business today (19 August 2019).

The results come off the back of a net loss reported in Q1 of 2019, the group’s first quarterly loss since its initial public offering (IPO) in 2005. Investors will be hoping that a renewed focus on operational efficiencies will combine with downscaled investment spend to move the company back into profitability.

How to trade Baidu earnings

Broker ratings and analyst expectations

A consensus of Bloomberg estimates predicts the following:

  • Revenue of ¥25.772 billion (a decline of 0.8% year-on-year[YoY])
  • Earnings per share (on an adjusted basis) of ¥6.37 (a decline of 70.3% YoY)
  • Earnings per share (GAAP) ¥2.83 (a decline of 84.4% YoY)

The long-term average rating for Baidu remains a buy, as per a Thomson Reuters poll of 35 analysts.

Broker ratings

Baidu – technical view

The 20-, 50- and 200-day moving averages (labelled 20MA, 50MA and 200MA respectively) show the short-, medium- and long-term trends to be down for the share price of Baidu. The stochastic oscillator does, however, suggest that the stock may be oversold at current levels.

We believe the downtrends highlighted by the moving averages take precedence over the oversold signal. Trend followers might prefer keeping a short bias to trades while looking for a rebound from current oversold levels as the short entry opportunity.

The above chart shows that after the release of Q1 2019 results, the share price of Baidu fell dramatically. Since the initial decline, the price consolidated into a triangle formation before continuing its decline.

The downtrend remains prevalent and traders might look to find a short entry into a rebound or a break of support.

In terms of a rebound scenario, a short entry would be considered on a bearish price reversal before reaching the resistance of the triangle at 113.10. Should the 113.10 level instead be broken (with a close above), our bearish assumptions would no longer be valid and a bullish bias to trades would again be reconsidered (with further validation).

Should a rebound not manifest and the downside continue, breakout traders might look to a close below the 93.50 level for short entry.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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