Company Name: Baidu, Inc
Entry Price: $135
Target Price: $150
Projected Yield: 11.10%
Time Line: Before December 21, 2020
Baidu is one of the largest technology companies in China providing web services. Its flagship product is a search engine with a market share of around 70%. The company is also one of the market leaders in self-driving car and cloud computing industries.
Baidu generates 100% of its earnings in China.
What's the Idea?
Capitalize on a stock that may rise with the self driving car and robot taxi market development, as well as with cloud technologies and overall company development.
Buy Baidu Shares >>
Why Trade Baidu?
Reason 1: Self Driving Car and Robot Taxi Market Development in China
The self driving car and robot taxi market in China is growing, and this may boost Baidu's earnings in the midterm, as the company is currently number one in this segment. During the Baidu World Conference in Beijing, the company announced the following achievements:
- 6M km of open road tests in China
- 100,000 passengers carried in 27 cities without a single accident
- Progress in reducing the average cost of self driving: only 16% of 2013 in late 2019
- DuerOS, Baidu's car operating system, held 49% of the market share by the end of Q2 2020
- Starting September 2020, the new Apollo Go robot taxi service is being tested in Beijing
According to Baidu's estimations, self driving vehicles may take up to 20% of the market by 2030. Meanwhile, the potential robotaxi market might reach $240B. Both licensing and creation of one's own taxi service may work for monetization. This may also have a positive impact on Baidu maps service, which can be used for robot taxis.
Reason 2: Cloud Tech Growth
Baidu is the fourth China's cloud company, behind only Alibaba, Tencent, and Amazon. However, Baidu may get an even better position, given its leadership in the artificial intelligence segment.
In September, the company unveiled the updated Baidu Brain 6.0, an open-source artificial intelligence platform used by 2.30M developers. In addition, the rise in cloud business is really impressive: 70% compared to 2019, based on Q2 results.
Reason 3: Online Ad Segment Growth and Mobile App Development
The online ad segment accounts for short term growth drivers. According to Baidu, this sector got stabilized, which may lead to an increase in advertising costs for publishers.
The stock price may also get boosted with mobile search preferences and launching Baidu's very own super app. The number of requests coming through Baidu App increased by 28% compared to last year. The app's earnings rose more than by 10% in Q2 2020, while the average number of users per day increased by 9% compared to 2019.
In addition, the average daily number of Smart Mini Programs ecosystem users reached 339M in Q2, which is 25% better than last year.
Reason 4: Buyout Program
With the stock being relatively low, a buyout program may become a good supporting factor for the price. Baidu launched such program worth $3B, which is about 6.80% of the current market cap.
How to Use the Idea
- Buy Baidu shares at $135
- Allocate no more than 2% to 3% of your portfolio amount. To build a balanced portfolio, you can use our analysts' recommendations for an USD or a EUR portfolio.
- Sell the stock when the price is at $150 per share.
How to Buy Baidu Shares?
If you don't have an investment account yet, open it now: this can be done online, in just 10 minutes. All you need to do is fill out a short form and verify your account.
After opening an account, you can buy shares in either of the following ways:
Freedom24 Web Platform: In the Web Terminal section, type BIDU.US (Baidu ticker in the NASDAQ) in the search box, and select Baidu.com, Inc. (ADR) in the results). Open a secure session in the trading window on the right, select the number of shares you want to buy, and click Buy.
Freedom24 iPhone or Android App: Go to the Price screen and tab the search icon in the top right corner. In the dialog that will show up, type BIDU.US (Baidu ticker in the NASDAQ), and select Baidu.com, Inc. (ADR) in the results. You will then see Baidu.com, Inc. (ADR) stock in the market watch; tap it and go to the Order tab in the dialog that shows up. Specify the number of shares you want to buy and click Buy.
Buy Baidu Stock, don't miss the robot taxi and cloud market growth!
Buy Baidu Shares >>
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