Baidu’s share price spiked 7.78% higher after Q2 sales top estimates
The group posted a 1.4% increase in revenue for the three months ended June, at 26.33 billion yuan (US$3.73 billion), higher than analysts' estimates of 25.8 billion yuan.
China’s online-search giant Baidu surprised analysts on Monday with a quarterly revenue that beat estimates as the firm held on to its advertising numbers despite intense competition from rivals and a slower macroeconomic environment.
The group posted a 1.4% increase in revenue for the three months ended June, at 26.33 billion yuan (US$3.73 billion), it said in the results statement after trading hours on Monday. The performance was higher than analysts' estimates of 25.8 billion yuan.
Shares of Baidu rose as much as 10% in extended trading on Monday, before settling 7.78% or US$7.52 higher, at US$104.22.
The Nasdaq-listed shares have faced some severe headwinds brought on by weak advertisement revenue projections amid the slow economic growth in China and aggressive competition. Year-to-date, Baidu’s shares have fallen by 35.8%, from US$162.25 on January 2, 2019.
‘Facing severe outside challenges and a weak macro environment, the company has initiated a series of ground-breaking changes from top to bottom, involving company structures, personnel moves and business consolidation…Despite periodic pain, these changes will have positive and profound impact, enabling Baidu to walk farther and steadier,’ the group’s chief executive Robin Li had said in a letter to employees after the results.
The group’s revenue of its core businesses grew 12% from a year ago. Net income meanwhile, fell to 2.41 billion yuan.
Revenue from Baidu’s video streaming service iQiyi rose by 15% to 7.11 billion yuan, as the service passed the 100 million subscriber mark in June this year, despite tough competition from rivals such as ByteDance’s TikTok.
Sales from its online marketing services, a significant contributor to overall sales however, fell 9% to 19.2 billion yuan, due to tighter advertisement regulations by the government and the impact from the China-United States trade war.
Baidu said it expects its overall revenue for the current quarter to be between 26.9 billion yuan to 28.5 billion yuan.
As the country’s internet advances, the 19-year old firm has to deal with competition from new contenders. It recently toppled off the list of China’s five most valuable internet companies, according to Bloomberg, after it lost more than 40% of its market value this year.
In the previous quarter, Baidu posted its first quarterly loss since 2015, the year it got listed. The announcement caused Baidu’s shares to shed more than 15% in a day.
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