Please ensure Javascript is enabled for purposes of website accessibility

Why Baidu Stock Jumped 20.6% in February

By Keith Noonan - Mar 8, 2021 at 10:04AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Chinese tech giant is pulling off an impressive comeback.

What happened

Shares of Baidu (BIDU -0.69%) jumped 20.6% in February, according to data from S&P Global Market Intelligence. Excitement about the company's entry into the electric vehicle (EV) space helped the Chinese technology specialist post impressive gains despite a late-month sell-off for the tech sector. 

BIDU Chart

BIDU data by YCharts.

Recent reports have suggested that Baidu is gearing up to make a big play in the EV market, and the company's core search, digital advertising, and artificial intelligence businesses also appear to be rebounding amid strong performance for China's economy. The company delivered impressive fourth-quarter results in February and saw a swell of favorable coverage from analysts, paving the way for its stock to record strong double-digit gains. 

Four cars viewed from above

Image source: Getty Images.

So what

Baidu published its Q4 results on Feb. 17, with sales falling just shy of the average analyst target but earnings for the period coming in well ahead of expectations. The company posted adjusted earnings of $3.08 per share on revenue of $4.64 billion, while the average analyst target had called for profit of $2.49 per share on sales of $4.66 billion.

After years of lackluster performance, the company expects that its core segment will see sales increase between 26% and 39% in the first quarter. Total revenue for the period is expected to come in between $4 billion and $4.4 billion, good for growth of roughly 20.5% year over year at the midpoint of the target.

Now what

The sell-off for tech stocks has continued into March's trading. Baidu shares are down roughly 14% in the month so far. 

BIDU Chart

BIDU data by YCharts.

Even with the recent pullback, excitement surrounding the company's move into EVs has helped push the stock up roughly 123.5% over the past year. Baidu has been one of the most aggressive early players in the autonomous vehicles space, and the potential to integrate its strengths in self-driving vehicles with growth initiatives in the EV market could be big. 

Baidu has a market capitalization of roughly $89 billion and trades at approximately 24.5 times this year's expected earnings.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Baidu, Inc. Stock Quote
Baidu, Inc.
BIDU
$124.47 (-0.69%) $0.87

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/22/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.