Baidu, Inc. (NASDAQ:BIDU) blames slowdown on softening macroeconomy
Chinese search engine giant Baidu reported better-than-expected second quarter earnings on Monday, sending shares in the Nasdaq-listed company 8.4% higher in after-hours trading despite a 62% fall in profit.
The company said it managed to gain ground in video streaming despite stiff competition from short-video app TikTok, with revenue rising 1.4% to 26.3 billion yuan ($3.8 billion) for the three months ended June 30, surpassing analysts estimates of around 25.8 billion yuan.
Net income rose to 2.4 billion yuan, a significant improvement from the January-March quarter when Baidu logged its first net loss of 327 million yuan since going public in 2005, but down 62% percent compared to the same period last year.
Much of the company’s second-quarter earnings growth was driven by its fast-growing streaming business iQIYI. Revenue from iQIYI rose 15% on the year to 7.11 billion yuan, with the Netflix-style streaming platform crossed the 100 million subscriber mark in June.
Online marketing services, which deliver the lion’s share of the company’s revenue, fell around 9% in the 12 months to June 30 to 19.2 billion yuan as advertisers scaled back spending in sectors ranging from healthcare to online games and financial services.
The company blamed a “softening macroeconomy” for the slowdown.
Baidu shares have slumped by more than 40% since the start of the year, with the company’s $33.2 billion market capitalization now trailing Tencent-backed Meituan-Dianping and NetEase Inc.
At an earnings call on Monday, Baidu executives tried to downplay the threat posed by ByteDance, saying the company was “happy to see new players” and believes that it will “provide a better user experience.”
While Baidu still controls about 70% of the Chinese search engine market, in a country where Google is unavailable, it is at risk of losing more users as the company struggles to restore public trust since a college student died in 2016 after trying “cancer cures” at a hospital which appeared as the top-ranked site on its search engine.
Earlier this year, Baidu also faced a popular backlash over its promotion of sponsored sites, which slapped its shares with 6% fall in a single day.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 112.59.
The projected upper bound is: 110.86.
The projected lower bound is: 97.35.
The projected closing price is: 104.11.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 black candles.
A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 4 rising windows in the last 50 candles–this makes the current rising window even more bullish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 64.5851. This is not an overbought or oversold reading. The last signal was a buy 4 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 48.20. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 1 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 37. This is not a topping or bottoming area. The last signal was a buy 4 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 0 period(s) ago.
Rex Takasugi – TD Profile
BAIDU INC ADS closed up 7.520 at 104.220. Volume was 182% above average (trending) and Bollinger Bands were 13% wider than normal.
Open High Low Close Volume___
100.000 105.300 100.000 104.220 11,674,431
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 97.87 110.96 151.81
Volatility: 56 41 47
Volume: 4,915,187 3,601,963 3,550,854
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
BAIDU INC ADS gapped up today (bullish) on heavy volume. Possibility of a Breakaway Gap which usually signifies the beginning of a major market move. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
BAIDU INC ADS is currently 31.4% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of BIDU.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on BIDU.O and have had this outlook for the last 17 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.
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