Baidu (NASDAQ:BIDU)
For Baidu’s Q2 earnings, the macroeconomic and operating environment concerns will be highlighted. The second quarter’s earnings are expected to be released by Baidu (NASDAQ:BIDU) on Tuesday, August 30th, just before the market opens.
Consensus estimates for the company’s earnings per share are $1.58 (-33.9% year over year) and revenue is $4.24B (-12.8% year over year).
In the past two years, BIDU has consistently outperformed sales and EPS expectations, beating them 63% of the time. EPS estimates have seen 4 positive revisions and 7 negative revisions in the last three months. There has been one upward and ten downward revisions to revenue predictions.
Investors’ ongoing worries about how COVID-19 supply limitations and lockdowns badly affected China’s economy during Q2 and the impact they had on the tech giant’s cyclical businesses can be seen in the numerous downward revisions for both the top and bottom lines.
The Chinese government has announced new stimulus investment to bolster the local economy, and there have been reports that the United States and China are close to agreeing on an auditing agreement, which has led to an improvement in public opinion of the country’s technology sector recently.
The second round of domestic video game licenses was authorized by the Chinese government earlier in June, which was another indication that Beijing was attempting to assist its technology sector and reduce regulatory burdens.
Late in May, following the release of Q1 earnings that exceeded expectations thanks to strength in its core businesses, particularly non-online marketing and cloud services, U.S.-listed shares of Baidu (NASDAQ:BIDU) increased by 14%.
Following the results, Deutsche Bank predicted that the company had reached a bottom in Q1, and that gradual improvement would start in Q3. However, it cautioned that BIDU would likely have a more challenging operating environment in Q2 for its cloud and advertising businesses.
Other Chinese internet behemoths including JD.com (NASDAQ:JD) and Alibaba (HKD:BABA) have released Q2 earnings that have outperformed expectations, boosting the sector’s equities in the process.
Other noteworthy news from the quarter includes claims that Baidu (NASDAQ:BIDU), the second-largest player in the Chinese video streaming market, is in talks to sell its majority ownership in iQIYI (NASDAQ:IQ). Currently, the firm owns 53% of IQ.
The SA Authors recommendation for BIDU stock is a strong buy, compared to the buy consensus on Wall Street. It is rated as a hold by Seeking Alpha’s Quant system, which routinely outperforms the market.
Featured Image: Megapixl @Xcarrot007
Author Jowi Kwasu