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Here's Why Baidu's Stock Fell 16% Last Month

By Chris Neiger – Apr 8, 2020 at 2:21PM

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As investors grew more worried about COVID-19, the China-based tech company saw its stock price slide.

What happened

Baidu, Inc. (BIDU -0.20%), the tech company best known for being the leading search engine in China, saw its share price tumble 16% in March, according to data provided by S&P Global Market Intelligence. The company couldn't escape the broader stock sell-off as investors came to grips with the impact of COVID-19 on the global economy. 

So what 

China-based companies have been feeling the effects of the coronavirus crisis for a few months now, and even a large tech company like Baidu hasn't been spared. The company's 16% share-price drop in March came after the company's stock slid 3% in February and more than 2% in January. 

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Image source: Getty Images.

While many cities in China have started to open back up, and some businesses are slowly getting back to normal, investors are still concerned that COVID-19 will continue to wreak havoc on the global economy in the coming months.

Baidu has tried to remain optimistic during this time. Management said on the company's fourth-quarter earnings call that while the coronavirus impact has been negative on its business in the short term, "[t]he side effect is that people are staying home more, and they have the opportunity to get to know Baidu's products and services better."

Now what 

Even as China begins to open up more parts of its economy and returns to some pre-coronavirus normalcy, Baidu and many other Chinese companies will likely feel the effects of COVID-19 as the virus begins to affect the world economy.

As of this writing, Baidu's share price is down more than 1% in April, and investors can likely expect more volatility from the stock in the short term as investors adjust to how COVID-19 will affect businesses in the coming months.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Baidu. The Motley Fool has a disclosure policy.

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