Jim Cramer Is Wrong About Baidu

There was speculation earlier this summer that Qihoo 360 would snap up Sohu.com Inc (NASDAQ:SOHU)‘s Sogou, a move that would combine the country’s second- and third-largest engines to form a platform that would command nearly a quarter of the country’s search queries. However, that plan was upended when gaming and chat leader Tencent acquired a substantial stake in Sogou this week.

Either way, it’s not as if Baidu.com, Inc. (ADR) (NASDAQ:BIDU)’s growth has stalled under Qihoo 360’s challenge. Revenue climbed 39% in its latest quarter, and Baidu’s targeting revenue growth to accelerate to a 40% to 43% rate in the current quarter. Baidu’s trading at less than 24 times next year’s projected earnings. That’s not cheap, but it’s certainly more than reasonable given its growth.

Cramer is certainly correct about the threat of China’s restrictive government. It has kept China’s Internet on a tight leash, and you never know when it will pull back some more. However, investors that have stayed away from Baidu.com, Inc. (ADR) (NASDAQ:BIDU) since it went public eight years ago at a split-adjusted price of $2.70 have missed out on one of tech’s biggest winners in that time.

Baidu.com, Inc. (ADR) (NASDAQ:BIDU)’s made investors rich by scaling this Great Wall of worry, and my apologies if that reference is just as questionable as Cramer bringing up a chicken dish.

The article Cramer Is Wrong About Baidu originally appeared on Fool.com.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Baidu and Sohu.com. The Motley Fool owns shares of Baidu. 

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