baidu stock price
Baidu stock crashed 16% on Friday after the company hailed as “China’s Google” shocked investors with brutal earnings. Here’s what else ails the company. | Source: Shutterstock

By CCN: Baidu, China’s largest search engine and that country’s equivalent of Google, suffered a 16 percent stock price haircut after reporting a poor earnings quarter that stunned shareholders.

Baidu Stock in Freefall After Q1 Losses Shock Investors

baidu stock price chart
Baidu stock endured a brutal crash at Friday’s opening bell, and it failed to recover along with the wider market. | Source: Yahoo Finance

As China’s economic growth continues to slide, one of its largest tech companies, Baidu, has taken a hit to advertising revenues. It reported losses of $47 million for the first quarter of 2019, with online advertising demand plunging.

CEO Robin Li blames his company’s woes on the slowing pace of China’s economic growth as well as tighter government oversight of the internet. China remains one of the most censored countries in the world. Li told investors during an earnings call:

“Although the Chinese government has announced many economic policies to bolster the economy … We are taking a cautious view that online marketing in the near term will face a more challenging environment.”

Trade Tensions To Blame?

China’s economy is now growing at its slowest pace in almost 30 years, albeit on the back of year-on-year double-digit GDP growth during the first decade of the century. Baidu relies heavily on the health of the domestic economy.

The country is now plagued by mounting uncertainty as it finds itself in the midst of escalating trade tensions with the United States. The two countries have been threatening to increase tariffs, with Walmart recently announcing plans to increases retail prices as a result of higher wholesale costs.

Two affiliates of Chinese mobile phone giant Huawei were slapped with indictments alleging ten federal crimes, including fraud and conspiracy in connection with deals in Iran.

The case has further strained relations between the two economic powerhouses. Apple stock could face a beating due to mounting trade tensions between the two countries. The consumer electronics giant could be severely lashed by a Sino-US trade war, with the Chinese market its second most important.

While Baidu is not exposed to the US marketplace, any strain placed on China by trade tensions could impact the company negatively, especially as the domestic Chinese economy continues to struggle.

Baidu On The Mat As Tencent And Alibaba Reign

Baidu might be suffering from wider Chinese malaise, but rival tech giants Tencent and Alibaba both released positive figures for the quarter earlier in the week, suggesting Baidu may be facing problems relating to its corporate strategy.

With a reliance on internet marketing revenue, which made up 73 percent of its earnings for the last quarter, Baidu said it would merge its mobile and search businesses into one. The firm also announced several executive changes.

BIDU shares last traded at $128.88 for a session decline of 16.15 percent, far and away the worst among Nasdaq-listed stocks.

This article was edited by Josiah Wilmoth.

You May Also Like

Dow Retreats as Consumers Begin $1 Trillion Christmas Shopping Spree

The Dow Jones retreated during November’s final trading day, even as consumers began a record $1 trillion Christmas shopping spree.

Watch Black Friday Deal Hunters Rack Up Christmas Debt in Real Time

This neat Black Friday and Cyber Monday graphic lets you watch deal hunters rack up purchases – and debt – in real-time.

Dow Swoons Because Trump’s Looming Tariffs Threaten to Ruin Christmas

The Dow Jones fell on Friday as rising tensions between Trump and China raised the risk of December tariffs ruining Christmas for the Dow.

Happy Danksgiving! Marijuana Dispensaries Chill Prices for Black Friday

They may need to add “shopping fever” to the list of ailments that qualify for medical marijuana. Traffic is high for Black Friday deals.

Spend Your $1,000 Wisely on Cyber Monday. Consider These 4 Stocks

The average consumer will spend $1,000 this holiday season. Don’t be average, consider making your money work for you with these stocks.

Deutsche Bank Reveals the Real Reason Stock Market Is at All-Time Highs (& Why It Can’t Continue)

The US stock market is at all-time highs, but what’s driving this ten-year bull market? It’s stock buybacks, according to Deutsche Bank.