Baidu takes a tumble as it receives approval to list in Hong Kong

The Chinese tech giant’s shares have taken a beating since Wednesday (03 March), as investors reassessed their portfolios on the back of rising US bond rates.

  • Baidu Inc (NASDAQ: BIDU) share price is down over 14% since Wednesday
  • The stock’s decline is the result of a tech stock correction following the rise of US bond rates
  • On Thursday (04 March), the search engine company also reportedly received approval for a secondary listing closer to home
  • BIDU is seeking to raise up to US$3.5 billion in the share sale, which could take place before the end of this month
  • Trade BIDU shares, long or short, with an IG account

Baidu share price: what’s the latest?

Baidu shares have tumbled over 14% since Wednesday (03 March 2021), with technology stocks being sold down amid the rise of US bond yields.

The Chinese internet company closed 6.2% lower on Thursday (04 March 2021) alone at US$260.59 a share.

By comparison, the tech-heavy Nasdaq-100 index fell nearly 5% during the same period.

Year-to-date, the stock is still up over 20%. Market capitalisation stands at US$88.88 billion as at the close of Thursday.

Baidu gets approval for a second listing

Baidu’s decline came as it was reported that the company has received approval from the Hong Kong stock exchange’s listing committee for a secondary listing in the city.

The search engine giant could launch a share sale as early as next week, said people familiar with the matter, Bloomberg reported.

The company is also seeking to raise up to US$3.5 billion in the offering, or about five to nine percent of its share capital, with CLSA and Goldman Sachs selected as underwriters for the deal.

A Baidu spokesperson has declined to comment on the news.

Baidu debuted on the US stock exchange in 2005 at an offering price of US$27 for a deal size of just over four million shares. Shares quickly doubled at opening to US$66, before closing at US$122.54.

The listing was described as the ‘IPO market's biggest splash in at least five years’.

Since Alibaba’s listing in Hong Kong in 2019, a slew of Chinese technology companies have launched on the Hong Kong stock exchange, including JD.com, NetEase and more recently, Kuaishou Technology.

Where next for BIDU stock?

Looking ahead, BIDU has received a consensus rating of ‘strong buy’ and price target of US$341, according to the latest data published by TipRanks.

The price target represents a 30.9% upside from the last traded price.

The latest analyst reports came from Barclays and KeyCorp, who late last month reiterated their ‘overweight’ ratings while boosting price estimates to US$400 (from US$350) and US$390 (from US$290) respectively.

Barclays analyst Gregory Zhao wrote in a 22 February note that Baidu is attempting to ‘rejoin the first echelon’ of the China Internet sector, by leveraging management's vision and ‘unflagging efforts’ of the past three years.

He also views Baidu's artificial intelligence cloud as a key revenue driver going forward.

Meanwhile, KeyBanc analyst Hans Chung believes that re-opening recovery, better monetisation, and strong cloud adoption will continue to drive the company’s earnings this year.

Furthermore, Baidu’s autonomous driving investments could gain more momentum if the self-driving trend continues to pick up, Chung added.

Baidu itself highlighted in its Q4 2020 earnings report that its non-advertising businesses - comprising internet value-added services, AI cloud, intelligent driving - was 10 times the size of the online-marketing arm, with the former’s growth rate expected to be triple that of online marketing in the next few years.

How to trade Baidu stocks with IG

Are you feeling bullish or bearish on Baidu’s stocks?

Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform, or by investing in the share directly, in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <Baidu inc> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

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