Baidu sees strong fourth quarter, planning U.S. IPO for “Chinese Netflix”
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Baidu sees strong fourth quarter, planning U.S. IPO for “Chinese Netflix”

Chinese search engine market leader and technology giant Baidu posted fourth quarter results this week that beat analysts’ estimates on sales and demonstrated strong news aggregation and web search businesses. The company brought in 23.6 billion yuan over the quarter, beating out predictions of 23.1 billion, sending its share price up by 4% on the day. This revenue beat is hugely important to the company – if it wants investors to get behind its “experimental” investments into everything from self-driving cars and artificial intelligence, it needs to deliver on the more traditional side of its business.

Baidu’s share price is up by 29% over the last 12 months

graph 1602 baidu


SOURCE: Yahoo Finance

Net income came in at 4.2 billion yuan against expectations of 3.97 billion, and the company also beat on adjusted earnings, which totaled 15 yuan per share against consensus estimates of 13.

The company’s newsfeed service, which uses artificial intelligence to decide what users want to read, has seen significant success in the last quarter. It is now competing with market leader Jinri Toutiao, and has become a great source of ad revenue for the company. Jefferies analyst Kevin Chan expects Newsfeed to generate 10 billion yuan in 2018 and says: “we expect Baidu to be one of the top three players of the mobile news feed ad market together with Toutiao and Tencent.”

The other big news around Baidu is the revelation that it’s planning the U.S. IPO of iQiyi. The company, often called the Chinese Netflix, is a leader in the SVOD market, and its value keeps rising. Chan says: "We expect content investment to remain heavy in 2018 with Tencent Video and Baidu iQiyi solidifying their market leadership, mostly through increasing in-house content production."

Both Jefferies and CICC Research put a price tag of around $15 billion SVOD platform.


Dominion holds Baidu in its Global Trends Ecommerce Fund.

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