Once again, Baidu.com, Inc. (ADR) (NASDAQ:BIDU) stock is dancing with the $100 mark. Since last month, the company’s stock has jumped from the low-$80 range to hit as high as $103. What caused this spike? And can the company shoot past $100 again? While there are plenty of answers, here are the big three reasons.
1. Mr. Market realizes Baidu is a revenue-generating machine.
Yes, in its latest quarterly report, Baidu missed analysts’ revenue estimates. But it also grew revenues by 40% year over year. That’s HUGE. For comparison, Google Inc (NASDAQ:GOOG) has only grown its revenues by about 30%.
In fact, Baidu.com, Inc. (ADR) (NASDAQ:BIDU) has been crushing Google for the past five years.
Source: YCharts.
2. Baidu is the juggernaut it’s always been.
Over the past year, you’ve seen that market share fall as low as the 55%, according to Statcounter. This is all because of Qihoo 360 Technology Co Ltd (NYSE:QIHU)‘s entrance into the market.
Around this time last year, Qihoo came in and decided it didn’t just want a piece of the anti-virus or browser market, but it also wanted a piece of the search market. And, boy, did it deliver. It went for 0% to 8% of the search market in under a year. As the stock continues to hit new 52-week highs, it seems that Mr. Market believes Qihoo 360 Technology Co Ltd (NYSE:QIHU) will continue to steal away market share.
Luckily for Baidu.com, Inc. (ADR) (NASDAQ:BIDU), Google’s the one that got hurt the most. In China, Google Inc (NASDAQ:GOOG)’s market share has fallen from 16% to the single digits.
In any case, Baidu seems like it’s doing more than fine. Bloomberg Businessweek reports that Baidu has reclaimed its monopoly-like dominance: It commands about 80% of search market share in China — thus showing Wall Street that it’s still the juggernaut it has always been.
3. The PPS Deal will help make Baidu a “Netflix of China”
In May, Baidu.com, Inc. (ADR) (NASDAQ:BIDU) announced that it would pay $370 million to acquire Shanghai-based video provider PPS. In essence, Baidu is looking to merge PPS with its own video arm iQiyi, making Baidu the biggest place to watch videos online. By doing so, Baidu is stealing the title from Youku Tudou Inc (ADR) (NYSE:YOKU).
More importantly, Baidu.com, Inc. (ADR) (NASDAQ:BIDU) may soon become a “Netflix, Inc. (NASDAQ:NFLX) of China,” providing on-demand access to a variety of video content. Already, Baidu iQiyi is called the “Hulu of China” because of its focus on longer-form, high-quality domestic content. Now that it has PPS, Baidu’s video site will soon provide foreign content such as popular American TV shows. All this spells trouble for its competitors like Youku Tudou Inc (ADR) (NYSE:YOKU).
