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Baidu stock pops in late trading after sales top estimates
[HONG KONG] Baidu Inc's quarterly revenue beat analysts' estimates after China's biggest search giant managed to hold onto advertising despite a challenge from aggressive rivals like ByteDance Inc.
Revenue rose 1.4 per cent to 26.33 billion yuan (S$5.18 billion) for the three months ended June 30, beating the 25.8 billion yuan average of analysts' estimates. The company's shares rose as much as 10 per cent in extended trading.
Baidu's better-than-expected results will soothe investors' worries that the 19-year-old company is losing steam as China's Internet evolves from desktop to mobile. Rivals like ByteDance have increasingly chipped away at Baidu's core ad sales via increasingly popular news and social media apps. ByteDance also recently launched a general search engine, posing a direct challenge to Baidu's core business.
"Facing severe outside challenges and a weak macro environment, the company has initiated a series of groundbreaking changes from top to bottom, involving company structures, personnel moves and business consolidation," Baidu chief executive officer Robin Li said in a letter to employees after the results. "Despite periodic pain, these changes will have positive and profound impact, enabling Baidu to walk farther and steadier."
The search leader kept ByteDance at bay thanks to "years of search engine research and development, 174 million daily active users, and strong content ecosystem", Bloomberg Intelligence analysts Vey-Sern Ling and Tiffany Tam wrote in an Aug. 12 note.
Net income dropped to 2.41 billion yuan. In May, Baidu posted its first loss since going public in 2005.
Baidu had fallen off the list of China's five most valuable Internet companies, trailing Meituan and NetEase Inc, after shedding more than 40 per cent of its market value this year. Once touted as a member of China's tech triumvirate alongside Alibaba Group Holding Ltd and Tencent, Baidu has been left behind as the country's internet evolves.