Business is booming for Baidu – the Chinese search engine has reported its second-quarter revenue and net profit, and both figures have doubled (and then some) since last year. Unlike Google’s earnings, this beats analysts’ forecasts; Baidu’s stock price shot up as a result.
All this comes just ten days after our own Mike Sachoff reported that Google China was making some gains; it seems those are now in danger of being erased. Of course, while the financial news solidifies Baidu’s position within China, it doesn’t mean the company is ready to expand into America (or even Europe, as was once rumored).
“[A]fter yesterday’s run-up, Baidu has a market cap of $7.4 billion,” noted Douglas A. McIntyre for 24/7 Wall St. “That is for a company that may do $250 million in revenue this year. It may have 58% of the Chinese search market, but selling ads with search results is still unproven in that country’s as Baidu’s modest revenue attests.”
McIntyre then went on to write, “Baidu’s revenue improvements are spectacular, but, as they say on Wall St., they are off a small base. . . . In the US, Baidu would probably need to have revenue of $500 million to $1 billion to justify its market cap.”
But if Baidu’s revenue doubles again in the coming year, it’ll meet those numbers dead-on.
