Robin Li Yanhong, co-founder and CEO of Baidu in Beijing, China in October 2018.
Visual China Group | Getty Images
GUANGZHOU, China – Baidu shares rose just under 1% on Tuesday during the company’s opening in Hong Kong.
The Chinese technology giant, which is already listed in the United States, raised $ 3.1 billion in the Hong Kong secondary listing. Shares lowered gains during morning trading.
Unlike the initial public offering, secondary listings cannot be greeted with massive first-day performances, as shares of the company are already trading on another stock exchange.
The listing in Hong Kong is a big moment for Baidu, China’s largest search engine. The company lagged behind for a few years from mid-2018, leaving rivals such as Alibaba and Tencent behind. Baidu did not move fast as Chinese users flocked to mobile searches and a tough advertising market hurt the business.
But a turnaround, led by CEO Robin Li, has focused on convincing investors that the technology giant is a leader in artificial intelligence and autonomous drive, in an effort to diversify its revenue stream beyond advertising. And it seems to be bearing fruit.
In mid-May 2018, Baidu’s US listed equities closed at $ 284.07 per share, which was a record high at the time. But the stock fell more than 70% to a trough of $ 83.62 in March 2020 amid the stock market crash. This was the lowest closure since April 2013.
But since the low in March 2020, the stock has risen more than 200%. Baidu shares peaked at $ 354.82 in February.
“I think EVs (electric vehicles) are part of the story. At the same time, cloud computing, the integration of AI, are all the areas where Baidu has invested very heavily since 2014, and we’re just starting to reap the fruits of labor,” Brendan said. Ahern, chief investment officer at KraneShares, told Squawk Box Asia on Tuesday.
Baidu has an autonomous driving system called Apollo that can be sold to car manufacturers. The company started an independent electric vehicle business in partnership with Chinese automaker Geely. Baidu is also testing robot tax in cities, including Beijing. Last month, the firm launched a smart transportation project in the city of Guangzhou, in southern China.
James Lee, US and US internet analyst at Mizuho Securities, has a $ 350 price target on Baidu’s US listed shares, which is 31% higher than Monday’s closing price on Wall Street. He said the management of autonomous management could value $ 40 billion and that the Chinese government would continue to support this industry with favorable policies. Lee also said he expects Baidu’s advertising business to continue to gain momentum in the first quarter of this year.
“We do like the fundamentals of the company and we still expect the Baidu shares to outperform the market,” Lee told Street Signs Asia on Tuesday.
Meanwhile, Baidu has been trying to further diversify its revenue streams. The company raised money for its Kunlun Artificial Intelligence Semiconductor Unit, which is valued at $ 2 billion.