Why Baidu Shares Sank


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Baidu sank today by as much as 11% after the company reported earnings with weaker-than-expected guidance.

So what: Revenue in the fourth quarter was $1.02 billion, a 41.6% jump from the prior year. Non-GAAP earnings per share came in at $1.31. Both figures were marginally ahead of consensus estimates, which called for $1 billion in revenue and $1.29 per share. CEO Robin Li said the company faced challenging macro conditions, but was still able to put up solid growth.

Now what: Outlook for the first quarter is what really spooked investors. The Chinese search giant said revenue should be in the range of $945.4 million to $975.9 million, the midpoint of which is shy of the $967.1 million that analysts were modeling for. Several analysts have downgraded or trimmed estimates following the results, further adding to the downward pressure on shares today.

Regardless of your short-term view on the Chinese economy, there may be opportunity in Baidu. Could today's drop be an opening? Our brand-new premium report breaks down the dominant Chinese search provider's strengths and weaknesses. Just click here to access it now.

The article Why Baidu Shares Sank originally appeared on Fool.com.

Fool contributor Evan Niu, CFA, owns shares of Baidu. The Motley Fool recommends Baidu. The Motley Fool owns shares of Baidu. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.