Baidu (NASDAQ:BIDU) investors have seen better days. The stock has hit multiyear lows in each of the past four weeks, and what initially started as a drop to its lowest level in three years is now a five-year low. Shares of China's leading search engine provider are now just a 9% decline away from falling to the double digits for the first time since the summer of 2013.

It's been a perfect storm for Baidu. Investors are shying away from many Chinese growth stocks as trade tariff fisticuffs fly. China's economy is slowing. Baidu also didn't do itself any favors in last month's first-quarter report, a dreadful showing that saw the stock shed more than a third of its value for all of May. Things look pretty bleak right now, but let's go over the reasons why Baidu's next move might be higher instead of lower.

Baidu research team outside of the office.

Image source: Baidu.

1. The first quarter wasn't a dumpster fire

The headlines behind last month's financial update were pretty harsh. Baidu posted its first quarterly operating loss and deficit as a public company, and guidance posited dramatic deceleration for the current quarter. It's scary stuff, but there's a method to the harshness.

Baidu is spending heavily on traffic acquisition costs, content, and new growth initiatives. Bottom-line results have been lumpy at Baidu, so this isn't the first time that expenses are growing faster than revenue. It's never permanent and not fatal.

Baidu also did come through with a profit on an adjusted basis, contrary to the reported red ink. Yes, that adjusted income still fell woefully short of expectations, but it's the first time in more than a year that the former dot-com darling has failed to top analyst targets. Are we ready to call this the new normal? It seems more like the anomaly unless we see a few more misses as 2019 plays out.

I won't offer much of a defense for guidance. Flattish year-over-year revenue growth -- or up 1% to 6% if we limit our scope to continuing operations -- is brutal. However, this company knows a thing or two about bouncing back from bad quarters.

2. Baidu is better than it was six years ago

The last time that Baidu stock traded this low was July 2013, and we may as well compare the companies at the two mile markers if Wall Street is telling us that they are worth the same. The share count is essentially the same -- actually, slightly lower now -- so the market caps are fairly similar.

Today's Baidu is generating roughly three times the revenue of Baidu circa six years ago. The cash on its balance sheet has more than tripled, even if you factor in its long-term debt position. Margins aren't what they used to be, but trailing net income has still roughly doubled (and that includes this year's rough first quarter).

Baidu isn't growing as quickly as it did in the past, but that's par for the course in growth stock investing. More specifically to our situation, Baidu is expected to grow its revenue this year faster than it did in 2016, and obviously the shares were trading higher three years ago.

3. A short squeeze is possible

There were 7.2 million shares of Baidu sold short as of mid-May, the highest short interest for the stock in more than a year. With enterprise value commanding a mere 1.9 times its trailing revenue, the stock has never commanded a cheaper top-line multiple. All it takes is one favorable development to send the naysayers scrambling, triggering a short squeeze.

The warts are there for all to see in sizing up Baidu's fundamentals these days. The slowing growth and contracting margins aren't winning it a lot of fans. However, Baidu is more attractive now in other ways. It's cheap enough to bottom out here, even if optimism is in short supply at the moment.