Robin Li Yanhong, Co-Founder and CEO of Baidu in Beijing, China in October 2018.
Visual China Group | Getty Images
GUANGZHOU, China – Baidu shares were up just below 1% at the company’s Hong Kong debut opening on Tuesday.
The Chinese technology giant, already listed in the US, raised $ 3.1 billion in the secondary listing in Hong Kong. The stocks slashed those gains during morning trading.
Unlike IPOs, secondary listings may not be greeted with massive first-day meetings, as the company’s stock is already traded on another exchange.
Listing in Hong Kong is an important moment for Baidu, China’s largest search engine. The company had a few difficult years from mid-2018, lagging behind rivals such as Alibaba and Tencent. Baidu failed to act quickly as Chinese users flocked to mobile searches and a tough ad market hurt the company.
But a turnaround, led by CEO Robin Li, was aimed at convincing investors that the technology giant is a leader in artificial intelligence and autonomous driving in an effort to diversify its revenue stream beyond advertising. And that is paying off.
In mid-May 2018, Baidu’s US-listed shares closed at $ 284.07 per share, a record high at the time. But the stock subsequently fell more than 70% to a low of $ 83.62 in March 2020 amid the stock market crash. That was the lowest close since April 2013.
But since the low of March 2020, stocks are up more than 200%. Baidu shares hit a record high of $ 354.82 in February.
“I think EV (electric vehicles) is part of the story. At the same time, cloud computing, AI integration are all areas that Baidu has invested very heavily in since 2014, and we are only now starting to see the fruits of those efforts,” said Brendan Ahern , chief investment officer at KraneShares, Tuesday at “Squawk Box Asia.”
Baidu has an autonomous driving system called Apollo that can be sold to car manufacturers. The company started an independent electric vehicle business in collaboration with the Chinese car manufacturer Geely. Baidu is also testing robot taxis in Beijing, among other places. And last month, the company launched a smart transportation project in the southern China city of Guangzhou, the largest to date.
James Lee, US and China internet analyst at Mizuho Securities, has a price target of $ 350 for Baidu’s US-listed shares, which is 31% higher than Monday’s closing price on Wall Street. He said the autonomous driving company could be valued at $ 40 billion and the Chinese government will 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 love the fundamentals of the company and we continue to expect Baidu shares to outperform the market,” Lee told “Street Signs Asia” on Tuesday.
Meanwhile, Baidu has sought to further diversify its revenue streams. The company has raised money for its Kunlun artificial intelligence semiconductor unit, which is valued at $ 2 billion.