Chinese technology giant Baidu (BIDU) plans to release results for the second quarter of 2022 on August 30, before the market opens. Baidu specializes in internet-related services and products, and artificial intelligence (AI). BIDU’s share price is down 9.3% over the past six months, but is up 11.9% over the past five days.
The Street expects Baidu to post adjusted earnings of $1.58 per share in the second quarter. That’s well below his $2.39 per share in the same period last year. Earnings, on the other hand, have him pegged at $4.24 billion, down 12.5% year-over-year.
Baidu’s Second Quarter Website Traffic Trends Weak
The TipRanks Website Traffic Tool shows that Baidu is set to report weak Q2 results. In the second quarter, the estimated total number of visits to his website on baidu.com dropped significantly by 40.47% compared to the same period last year, according to the tool. The slump in website visits continued in July, where he decreased by 21.16% year-on-year.
Additionally, the TipRanks Website Traffic Tool shows that year-to-date estimated visits have decreased by 18.90% compared to the same period last year. These numbers suggest that Baidu is set to post a disappointing second quarter result. He’s also down 5.58% in total estimated visits in Q2.
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Potential catalyst for long-term growth
Amazingly, Baidu is the first company in China to obtain a license to commercially operate a fully driverless robotaxi service on public roads. Autonomous ride-hailing business Apollo Go is licensed to operate driverless robo-taxis in Beijing, Chongqing and Wuhan. It also plans to expand its business to 65 cities by 2025 and 100 cities by 2030.
Baidu boasts a robust AI cloud business developing applications across various verticals. Revenue in this segment was up 45% in the first quarter, demonstrating strength in the market.
And on the regulatory side, concerns over the delisting of US-listed Chinese stocks have diminished. US and Chinese regulators have signed interim agreements to audit Chinese companies. The deal will reportedly allow U.S. regulators to inspect the audit records of Chinese companies in Hong Kong. The process is expected to begin next month.
What is your target price for Baidu shares?
At TipRanks, BIDU stock has a strong buy consensus rating based on 12 buys and 2 holds. Baidu’s average price target is $205.07, meaning it could rise 38.8% from current levels. BIDU has a top target price of $275 (up 86.2%) and a bottom price of $155 (up 4.9%).
thoughts of the end
Baidu’s long-term growth trajectory has some catalysts, but short-term headwinds continue to drag down its performance. Now, his COVID-19 resurgence in China and the associated lockdowns are impacting businesses. In addition, inflationary pressures and a slowing economy are squeezing advertising costs, one of Baidu’s biggest sources of revenue.
Despite this, Baidu continues to meaningfully diversify its business into robo-taxis and AI cloud businesses, reducing its reliance on ad streams. This is likely why analysts are so optimistic about his BIDU stock as a potential long-term winner.