Baidu Algorithmic Stock Forecast

Baidu Algorithmic Stock Forecast

Baidu (NASDAQ: BIDU) is a Chinese web services company well known throughout China: so much so, in fact, that it is commonly regarded as significantly more popular than Google China. Founded in 2000, the company – headquartered in Beijing – offers a myriad of features to its predominantly Chinese audience: its communities and services include a question-and-answer community (Zhidao), a Wikipedia-esque publication (Baike), an image search, news, an instant messaging application, and a very popular MP3 music player. Baidu is the number one search engine in China, fifth in the Alexa Internet rankings, and the first Chinese company to be included in the NASDAQ-100 index.


As a site operating in the first language of most of its users, Baidu boasts the key advantage of brand recognition: it is recognized almost everywhere in China; its strong marketing and allegiances with the Chinese government allow it to account for nearly 80% of all search traffic in China (in comparison, as of 2014, Google holds approximately 1.6% of the market after a rapid drop from 11.25% or so in 2010). Baidu’s presence in China is advantageous in other practical ways, as well: it’s adapted to understand Chinese better than, say, Google is: where English has a single word for “I”, for example, Mandarin has several; Baidu, given its Chinese origins, has accounted for these linguistic differences.
All these locally-applicable advantages have the potential to be even more integral to Baidu’s success as Chinese Internet services penetrate more of the country: as of 2010, China’s Internet penetration rate was only 39.9%, and remains in the mid-40s at present; as rural areas gain connectivity and this percentage grows, it seems likely that Baidu’s strength will, too, assuming it continues to dominate market share.

While we think it is safe to say that Baidu may be a decent long-term investment, pending domination by Qihoo or another search engine, several factors contribute to the idea that it is presently at immediate risk of dropping.

While BIDU has inherent advantages such as government backing, colossal market share, sizeable revenue, and a stable record of success, its lack of international penetrance, its reputation for immoral conduct, the magnitude of its competitors, the volatility of Chinese government censorship, and a myriad of other factors ensure that it is wise to carefully monitor the company’s activities. I Know First forecasts a strongly bearish signal for BIDU in the immediate future. Given its strengths, however, and its tendency to resurface after it falls, BIDU may well be something to hold on to for the coming years, if one’s portfolio can handle some dips.

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