Baidu is to China what Google is to the U.S. They occupy roughly a 70 percent command of the search market. A year ago, their stock was less than 90 dollars, now it trades at around 155/share.
Just wondering about where this company and its performance is going?
Things to consider:
1. Microsoft has struck a deal with Baidu that will allow Baidu users in China to see English search results. May not provide much of a benefit for local Baidu users, but it points to how microsoft views the company (not that that necessarily means anything and it is probably just a function of the fact that Baidu is currently the market share leader).
2. Baidu seems to have established "the google habit", where search has now become identified with a specific engine by the majority of the population.
3. Baidu might have privacy concerns due to the free-wheeling nature of the web in China and also due to the chinese government's ultimate control on web activity. However, Baidu seems to toe the line and the govt there seems to have their back, especially in light of google's prior stance.
4. There is still substantial room for growth in the internet user population in china.
5. Warner Music, Sony Music Entertainment and Universal Music Group have all signed an agreement that will allow Baidu’s social music platform to provide users with a wide selection of content without breaking the law.
6. If the U.S. experiences a downgrade of debt and this results in ever lower buying activity in the U.S. and this further results in less product orders from china and potentially increases their unemployment levels, this does not necessarily translate into decreased baidu user purchasing (search engine clicks) behavior. In the U.S., with a dismal unemployment rate, bad housing market, and falling orders for durable goods, Google reported revenues of $9.03 billion for the quarter ended June 30, 2011, an increase of 32% compared to the second quarter of 2010.
7. Baidu does not seem to have significant competitors. The more notable ones, Google and Sohu, do not seem to have significant momentum.