Baidu.com, Inc. (ADR) (BIDU): Creating a Mobile and Video Powerhouse

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Valuation comparison

The purchase of a mobile app platform is curious considering the press by Qihoo 360 Technology Co Ltd (NYSE:QIHU) to push into the online search market. As the leader in mobile apps, those two companies will go head-to-head in several key mobile markets.

Qihoo 360 Technology Co Ltd (NYSE:QIHU) has seen its stock surge this last 12 months, going from $15 to nearly $60 now. It now trades at a lofty 35 times 2014 earnings estimates. With the market cap now reaching $7 billion, the stock trades at 12 times revenue estimates for this year.

Baidu.com, Inc. (ADR) (NASDAQ:BIDU) only trades at 17 times forward earnings estimates after numbers have collapsed in 2013. With revenue still surging, the declines in earnings expectations have mainly come from decisions to push ahead with hiring more software developers for the push into mobile.

Youku Tudou Inc (ADR) (NYSE:YOKU) is still struggling to be profitable, so Baidu definitely has the ability to squeeze it for margins. Having the cash hoard and cash flows sure will help Baidu compete in this sector.

Bottom line

The mobile Internet market is China has already become very competitive. Baidu.com, Inc. (ADR) (NASDAQ:BIDU) is using its cash hoard of over $3 billion to quickly rise in the ranks of online video and mobile apps. Several developments that could help push more mobile searches back to the company. While investors missed the golden opportunity to purchase the stock back around $85 a few months back, the current stock price still offers plenty of room for multi-year gains as the China Internet market still has the potential of adding another 500 million users.

The article Baidu: Creating a Mobile and Video Powerhouse originally appeared on Fool.com and is written by Mark Holder.

Mark Holder and Stone Fox Capital Advisors, LLC have no positions in any stocks mentioned. The Motley Fool recommends Baidu. The Motley Fool owns shares of Baidu. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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