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Why Baidu Shares Sank

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Baidu (NASDAQ: BIDU  ) sank today by as much as 11% after the company reported earnings with weaker-than-expected guidance.

So what: Revenue in the fourth quarter was $1.02 billion, a 41.6% jump from the prior year. Non-GAAP earnings per share came in at $1.31. Both figures were marginally ahead of consensus estimates, which called for $1 billion in revenue and $1.29 per share. CEO Robin Li said the company faced challenging macro conditions, but was still able to put up solid growth.

Now what: Outlook for the first quarter is what really spooked investors. The Chinese search giant said revenue should be in the range of $945.4 million to $975.9 million, the midpoint of which is shy of the $967.1 million that analysts were modeling for. Several analysts have downgraded or trimmed estimates following the results, further adding to the downward pressure on shares today.

Regardless of your short-term view on the Chinese economy, there may be opportunity in Baidu. Could today's drop be an opening? Our brand-new premium report breaks down the dominant Chinese search provider's strengths and weaknesses. Just click here to access it now.

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Related Tickers

9/29/2016 4:00 PM
BIDU $182.23 Down -5.51 -2.93%
Baidu CAPS Rating: *****