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Saturday, September 25, 2021

Here is why Baidu Stock is facing fluctuation?

Baidu Stock is fluctuating on the weekend, it gained 1.97% on Friday but it has lost 1.49% in Monday’s pre-market session, as of this writing. Traders are expecting a volatile opening today and shares can go either side.


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Let’s have a look at what’s happening with the company and its shares.

An extraordinary wave of block trades

On Friday, March 26, 2021, stock markets experienced a $20 billion wave of block trades Friday that rattled investors worldwide.

The shares of Chinese tech giants and U.S. media conglomerates were dumped by Archegos Capital Management LLC, according to the only two people who are directly familiar with the trades. Goldman sold $6.6 billion worth of shares of Baidu, Tencent Music Entertainment Group, and Vipshop Holdings Ltd and Morgan Stanley traded about $13 billion including Farfetch Ltd., Discovery, Baidu Inc

Monday opening can be the most anticipated volatile opening for the U.S. equities.

Nomura and Credit Suisse facing losses:

Nomura said today March 29 that it is expecting a possible $2 billion loss due to transactions with a U.S. client and Credit Suisse warned that its first-quarter results will be affected by the margin calls by Archegos Capital.

 Pricing of Global Offering

OnMarch 17, 2021, Baidu offered 95,000,000 new Class A ordinary shares, in two offers one internationally and for 2nd Hong Kong offer.The final offer price for both the International Offering and the Hong Kong Public Offering has been set at HK$252.00 per Offer Share. Baidu is expecting gross proceeds of HK$23,940 million from the offer.

Recent Financial results

On February 17, 2021,  BIDU announced its unaudited financial results for the fourth quarter and the fiscal year ended December 31, 2020.

Fourth-quarter 2020 financial highlights

  • Fourth-quarter revenue was $4.64 billion.
  • BIDU spent $780 million in selling general and administrative expenses and $869 million for research and development expenses in the reported quarter.
  • Baidu Non-GAAP core operating income was $1.23 billion and Operating income was $763 million for the fourth quarter.
  • Net income attributable was $794 million for the fourth quarter
  • For the reported quarter, Adjusted EBITDA was $1.31 billion.
  • Cash, cash equivalents, restricted cash and short-term investments were RMB 162.9 billion ($24.97 billion), as of December 31, 2020

The fiscal Year 2020 Results

  • BIDU total revenues reached $16.41 billion for full-year 2020, the same as last year.
  • For the full year of 2020, selling, general and administrative expenses were $2.77 billion and research and development expenses were $2.99 billion.
  • Baidu Operating income was $2.20 billion and core operating income was $3.15 billion for the full year of 2020
  • The company’s net income was $3.44 billion and adjusted EBITDA was RMB $4.22 billion for the full year 2020.

About the company:

Baidu, Inc. is a Chinese multinational technology company specializing in Internet-related services and products and artificial intelligence, headquartered in Beijing’s Haidian District. It is one of the largest AI and Internet companies in the world

Conclusion: Baidu stock may keep fluctuating because of expected volatility in the market which is the result ofthe recent sale of shares by Archegos Capital Management.

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