Baidu stock price is in a bear market: will it rebound after earnings?

Baidu stock price has come under pressure in the past few weeks, moving from the year-to-date high of $150 in October to the current $113. This pullback has brought its market capitalization from ~$50 billion to ~$40 billion today. So, will the stock rebound after its earnings later on Tuesday?

Why Baidu stock price slipped

Baidu is the biggest search engine provider in China, the biggest country by population, with a 63% market share and over 735 million monthly active users.. Like Google, the company offers numerous services, with search being its core solution.

In addition to search, the company offers others services like video, maps, streaming, and Ernie, its AI chatbot that has become highly popular in China.

Baidu stock price has pulled back in the past few months as concerns about its advertising growth have remained. The most recent results showed that revenue from Baidu Core dropped by 4% to RMB 26.3 billion or $3.6 billion. Its advertising business pulled back by 15% and was offset by a 34% increase of its non-online marketing revenue.

This weakness is a sharp contrast to that of Google, which reported strong advertising revenue in the most recent quarter. One reason for Baidu’s ad revenue slowdown could be that most of its search results have been replaced by AI-generated content. 

iQIYI, another of Baidu’s core businesses, also reported weak results, with the revenue dropping by 11% to $926 million. At the same time, the company’s AI spending affected its profits as the cost of revenue rose by 12%. Its net income dropped to 5.5 billion yuan from the previous 7.8 billion yuan.

Baidu earnings ahead

The next important catalyst for the Baidu stock price will be its earnings, which will come out on Tuesday. Wall Street analysts expect the upcoming results to show that its revenue dropped by 7.95% in the last quarter to CNY 30.8 billion. The most optimistic analyst expects its revenue to come in at CNY 33.8 billion.

Most importantly, analysts believe that Baidu’s earnings-per-share will come in at CNY 8.37, down from CNY 16.6. For the year, analysts believe that its total revenue will be CNY 129.26 billion, down by 2.9% from what it made last year. 

Baidu stock will also react to its progress on other areas like robotaxi and autonomous vehicles. Its Apollo Go solution has already entered a multi-year partnership with Uber Technologies, the biggest ride hailing service. It also entered an agreement with Lyft, and is now testing its service in areas like Hong Kong, Dubai, and other cities. 

The upcoming results will also shed more light on the company’s recently launched M100/M300 chips. It hopes that its chips will ultimately match those made by American companies.

BIDU stock price technical analysis

The daily timeframe chart shows that the BIDU stock price has come under pressure in the past few weeks, moving from a high of $150 to $114 today. This decline was mostly because of its relatively weak results and guidance.

Baidu stock has moved to the top of the trading range of the Murrey Math Lines tool. It also bottomed at the 50% Fibonacci Retracement level.

Baidu shares have moved below the 50-day and 25-day Exponential Moving Averages (EMA). It has also moved slightly below the important support level at $116, its lowest level on October 22nd.

Therefore, the most likely scenario is where the Baidu stock price continues falling, potentially to the psychological level at $100. This target coincides with the 61.8% Fibonacci Retracement level.

On the other hand, a move above the strong pivot reverse point at $125 will invalidate the bearish Baidu stock forecast.

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