BIDU has a much more favorable PEG ratio. The PEG of BIDU will b

http://www.dailyfinance.com/quotes/baidu-inc-american-depositary-shares-each-representing-one-tenth-class-a-ordinary-share/bidu/nas

http://seekingalpha.com/article/240051-the-baidu-bubble-destroys-any-real-valuation

The Baidu 'Bubble' Destroys Any Real Valuation
33 comments | by: Daniel Harrison December 05, 2010 | about: ALBCF.PK / BIDU / GOOG / MSFT / YHOO Font Size: PrintEmail Recommend 3 Share this page
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If you are holding Baidu (BIDU) right now, get out while the going is good; you might want to buy some Yahoo (YHOO) with all the money you’ve made this year.

Take a look at the following table, which assumes trailing multiples and annualized (for the fourth quarter) FY10 earnings:


Company
Mkt. Cap

($ bln)
P/E
P/B
ROE

(trailing)

ROE (2010)
Mkt. Cap change yoy
Earnings change yoy

MSFT
231.17
11.6
3.9
8.1%
8%
-7.5%
-1%

GOOG
183.23
23.19
5.1
3.6%
4.3%
+1.16%
+22%

BIDU
38.05
90.95
46
0.05%
1.2%
+148.42%
+112%

YHOO
21.31
21.24
1.4
1.6%
5.4%
+9%
+92.5%



Compared to any of the American search engine giants, Baidu’s numbers are way out. This is the classic illustration of a bubble – where a single concept (in this case, domination of the Chinese consumer market) totally distorts any reasonable valuation of the price of both assets and earnings.

No Surprises From the Big 2 …

First, let’s look at the market value of America’s largest two online consumer tech providers: Microsoft (MSFT) and Google (GOOG). On a price/earnings basis, it is safe to say that neither is an outlier given that Mr. Softie can’t seem to grow earnings at all while Google has met the percentage growth that is standard for the industry in 2010.

In terms of the market capitalization of both companies divided by the difference between the firms’ assets and liabilities (price/book) there’s not a lot to raise your eyebrows at either. While Microsoft has a high return on equity (I have used the crude but tried-and-tested formula of net profits/market cap), you would expect to see this in light of the lack of growth in earnings.


… But “Lei Lo Mo,” What’s going on with Baidu and Yahoo?

Now consider this. Buyers of Baidu are paying 90 times earnings, and 46 times the break-up value of the company in order to get in on Chinese consumer action. Sometimes it’s OK to pay a high price for both earnings and book value if the return on equity is growing aggressively, as this means that the company is leveraging the resources at its disposal in order to give back more to its shareholders the next year. In the case of Baidu, however, the company has the lowest ROE of the pack, and has grown its earnings only marginally more this year than has Yahoo.

Added to that, Baidu's ROE growth is pathetic given its massive P/B ratio: at best (using 2009 data) its at half the rate of Yahoo's, nearer to Google's, which is more than four times larger. Baidu ought to be valued at half the price it is now -- and that's being generous. The reverse is true for Yahoo, however.

Okay, okay, I hear you say. Not Yahoo again; the eternal value play that’s lost 60% of its market value in the last 5 years after multitudinous management overhauls and false-start product launches.

But consider this: Yahoo has managed to grow its earnings over the last year by the same percentage as Baidu, while it still trades at 21 times earnings and 1.4 times book. Those multiples are the second-lowest and lowest, respectively, of all the Big Four. What’s more, with a projected $11.5 billion in earnings for FY10, Yahoo is expected to earn more than double what Baidu will this year – so those earnings should in theory be harder to grow by the same amount.

All of this is why the American internet giant has an ROE growth of 238% this year vs. Baidu’s 140%. In other words, Yahoo is putting your money to work more efficiently than is its Chinese counterpart.

Part of the reason for the company’s stunningly undervalued earnings and asset prices vs. its eye-popping Eastern-style ROE growth is the oft-overlooked 37% stake it has in the $8.7 billion Chinese e-commerce upstart Alibaba.com (ALBCF.PK). That stake has bolstered Yahoo’s balance sheet by around $3 billion in the previous five years, and continues to offer an investor keen on riding on the dragon’s coattails a cheap way of doing so.

One often cited investment analogy in Asia is the Chinese word for crisis: It is the sum of the characters meaning “danger” and “opportunity”. If you are searching for value, make sure your money is on the right side of that character equation and the Year of the Rabbit might well live up to the sort of productivity for which its namesake is world-reknowned.

Disclosure: No positions held
About the author: Daniel Harrison Daniel M. Harrison is a business journalist and consultant who has written for publications such as The Wall Street Journal, Dow Jones Newswires, and Forbes.com. In 2007, Harrison initiated Asian market coverage for TheStreet.com, reporting from New York and Hong Kong. He also served for a while... More Blog: theglobalperspective.com
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33Comments on this article Add a comment Register or Login to rate comments »

galapagos Comment (1) Sorry. Very questionable article. Baidu has the monopol in search and in consequence an outstanding postition in added services - in an market that will grow tremendous in the next 5-10 years. Growth rates about 100% now, perhaps 40-60% the next years.
You have to pay a PE of 47 (2011). I think Baidu is fairly valued now, but if Baidu can beat estimates in the next quarters and 2012 earnings estimates will priced in, Baidu shates will see 140 to 160 $.

You shoudn`t compare grow rates from Yahoo and Baidu. Yahoo had a lot of bad earnings in the past. Big percentage earning increase last year is only the result of the big rebound of the us economy. A one time effect. Earnings growth rates in the next two years will tell another story. Baidu - on the other hand - is improving earnings year to year - 2008, 2009 and 2010 no matter what the US economy does.

So i would put my money long term in chinese growth companys like baidu, ctrip, tencent, netflix, perhaps good small caps like yongye an indian equities instead of buying US-Companys.

Good luck rich
(long in Baidu,ctrip and yong since 2-3 years) Dec 05 06:49 AM Reply +5-4
Robert McDonald Comments (135) The fundamental problem with this author's analysis is the use of traditional metrics to describe an untraditional situation. He also uses irrelevant comparables with the possible exception of GOOG. If investing were that easy we would all be millionaires.

As an owner of Baidu I am investing in its position in the Chinese marketplace and its potential future performance, esepecially since Google is no longer a direct competitor. The fact that the Chinese government is on its side is a major plus for Baidu -- I would not want to bet against the Chinese government inside China under any circumstances.

I am also invested in Alibaba for similar reasons. One worry I have in that case is that the government position on Alibaba is not clear as far as I have been able to find. Some competitors have been using what we call illegal or borderline by our laws in their efforts to compete with Alibaba and it will be interesting to see if there is any intervention. If anyone knows about the position of Alibaba vs. relevant government officials, please tell us all.

If you want to use traditional P/E and PEG ratios to evaluate a more traditional stock, take a look at Apple. It is a screaming buy by these measures. Dec 05 04:09 PM Reply +2-1
lamont_cranston Comments (32) Learn to English. Dec 06 02:07 AM Reply +1-1
dontforget911 Comment (1) I agree 100% with the author. Baidu is Chinese government control which will inflate it's actual earning. No one can monitor the company's financial other than the Chinese government. I would not trust the Chinese government to be honest, look what they did to Google, the competitor. Baidu does not have the innovations like that of Google to have long term growth. Investors are nuts to invest in Baidu. If they do then it's because they stole Google's technology just like they pirate everything else. Heck if the Chinese government plays fairly then Baidu does not have a chance to compete with Google in China. Dec 05 09:15 AM Reply +5-4
lamont_cranston Comments (32) I've always wondered about this: technically by issuing ADR/ADS shares, Baidu has agreed to submit to SEC regulation. Can the SEC raid their offices in Beijing? If not, then they aren't really regulated the same way as other firms listed on US exchanges.

Anybody care to explain this? I've never bought ADR/ADS shares (except for a few European companies with local securities enforcement comparable to SEC) because of this uncertainty. Dec 06 02:13 AM Reply 00
seethrudanoise Comments (10) what about the crooks on the singapore new exchanges shorting bidu for markets open in china and what about the bidu stopping the weekly options ?.. Dec 06 09:11 AM Reply 00
ISRG buyer Comments (14) You cannot compare yahoo's growth to baidu's because yahoo will not sustain your stated growth rate above next year. Nor will it sustain it anytime in the near future. Yahoo is losing share and has nothing disruptive to stop this.

BIDU on the other hand is likely to have several years of hypergrowth in the chinese market. Not just the next one or two years but five to ten years out. There are more people online in China then those living in the USA and as those people accumulate more wealth along with more chinese coming online it will push the growth of BIDU.

Consider BIDU at the very least hast he opportunity to match GOOG's market cap as it is today. That would imply a 4 bagger from today's market cap for BIDU. Also consider the opportunity in China is far greater in 10 or 20 years then in the USA.

I sold BIDU at 30 (300 before the 10 for 1) thinking it was over valued. Then google bailed and gave BIDU a monopoly in china and that changed the game 100%. Don't lose sight of this. I've since wrote put leaps out with 50 and 75 strikes. This is my conservative way of making money and taking out some market risk if all markets tumble. I'll get a better entry point or I'lljust collect the premiums. Dec 05 09:51 AM Reply +4-1
Mark Krieger Comments (258) classis example of greater fool theory in action...but what happens when the music stops? A classic price implosion! Dec 05 09:51 AM Reply +2-1
USAFORSALE Comments (37) 10 Counter Points to the the sell article above:
1.) BIDU domiates China search. Over 70% share and rising.
2.) BIDU keeps beating earnings estimates. Author does not factor in growth estimates (PEG = Price to earnings growth estimate). Average growth estimates for BIDU earnings in next five years is 56.45% based on 14 analysts. Average growth estimate for YHOO in next five years is 13.61%. Also 2011 is nearly here. In one month the PE ratio for BIDU becomes 47 highest and possible 39 based on some 2011 earnings estimates. Therefore, BIDU has a much more favorable PEG ratio. The PEG of BIDU will be less than 1 in only 25 days. This is a bargain for a growth story like BIDU.
3.) BIDU is a local company supported by China. Several years ago Google and Yahoo had to limit mp3 searches while BIDU was ignored. This is not fair but good for BIDU investors. Care about facts in investing not fairness.
4.) BIDU has $37B market cap while Google has $183B market cap. BIDU can be 1/4 of GOOG since BIDU dominates 1/5 of world internet search (China) and GOOG dominates 4/5 of world internet search (everything else). [The ratio of 1/5 to 4/5 = 1/4]. This leaves plenty of room for growth. considering GOOG can double to 360B in next 5 years BIDU can be 90B. (China has poor unreachable areas to internet search for BIDU as does rest of world for GOOG). This allows for significant price appreciation in next five years for BIDU. Much greater than short term price targets which are already quite attractive.
5.) BIDU is moving higher. Great investors say don't sell winners. Buffet says NEVER sell a good stock.
6.) Analysts recommend BIDU. This creates buying pressure. Contrarian view would be there can be no more buyers when a stock is "loved" by all. However, most have been selling china lately and Cramer hated BIDU until recently. There are many articles on BIDU being over-valued in last several years. This creates potential buyers, as they become believers.
7) BIDU ADRs have recently been made available on exchanges in other countries, creating .more demand.
8.) CRIC just made deal with BIDU and SINA to handle all real estate information on BIDU, more China internet search.
9.) BIDU is entering other areas for growth: other countries, social networking, video, etc
10.) Daniel Harrison does not like it. Dec 05 09:52 AM Reply +5-2
Daniel Harrison Comments (120) It's not that I don't like BIDU as a company; it's that by any metric, it's overvalued here. The P/B is nuts, and for the P/E to come down to around 40-ish (which is still high, but maybe justifiable medium-term if ROE is aggressive) this co. has to grow earnings by over 2x next year. Most likely, that's not anywhere near achievable, even in China's white-hot consumer market.

YHOO on the other hand has close to $28 billion in Asian assets, with a neat holding in Alibaba that doubles-up as a biz partnership. That's a much cheaper way to get your foot in the region's door! Dec 05 10:06 AM Reply +1-1
USAFORSALE Comments (37) On a P/B basis YHOO may be a good investment. However, if I were picking a value stock I would probably not choose YHOO. But I will not comment further on YHOO, only BIDU.

I like the growth potetnial of BIDU. BIDU is a growth stock not a value stock. The PEG of BIDU will be less than 1.0 in 25 days. Earnings do not need to grow 3X to justify P/E of 47. You just need a growth estimate of 47%. BIDU has this. BIDU growth esitmate for next five years is 56.46%. This will support a P/E ratio of 56. Since BIDU will have P/E of 47 in 25 days, short term price appreciation is possible. Again P/E ratio may be 39 in 25 days based on some estimates. That is why many analysts have raised 1-year estimates to $140 and $160. Long term estimates can be much greater. The P/E is not absurd considering the 5 year growth projections of 56%. Also BIDU has been beating estimates. The trailing 5 year growth (fact not estimate) is 105%.

With great growth stocks, you have to buy high and sell higher. BIDU is not a stock to use the principals of Benjaimin Graham and Warren Buffet on (value investing). BIDU is more applicable to growth investing strategies such as those defined by Phillip A. Fisher in his book "Common Stocks and Uncommon Profits". BIDU measure well against the principal of Phillip A. Fisher. Dec 05 10:25 AM Reply +2-1
Daniel Harrison Comments (120) Starting next January, the trailing P/E multiple (earnings annualized for the 4th quarter) of BIDU will come down to 80.4, based on the current price of the stock. With 56% earnings growth, that's a PEG of around 52 or so, as you correctly point out.

If that P/E still stands by August (i.e. the stock doesn't move at all for 8 months) and the earnings growth is on or above target, I think there is potential -- though still high-risk -- value here. Otherwise, any movement upwards from here implies a game in which P/E values are allowed to bloat out of all proportion based on the expectation of ever more rapid growth.

Even for someone who wants to assume a higher level of risk in order to capture big growth gains, chasing valuations is a fools' game. Dec 05 11:03 AM Reply +10
USAFORSALE Comments (37) First, thank you for this exchange of ideas. Second , I would like to disclose that I am long BIDU. I may have a vested interest in defending a BIDU position, wanting price appreciation. However, I actually want price depreciation, as I want to add shares to my position. Any articles which drive BIDU price lower will be met with buying.

Back on topic:
As long as I have owned BIDU (3 years), trailing ratios always support selling. I have read articles similar to yours for many years. I based my share ownership on current year and future estimates. This has justified holding/buying. This has been a very wise move as one can see by the historic price. Therefore I will not base price on trailing ratios. I only quoted trailing 5 year growth ratio (of 105%) as evidence that future 5 year growth ratio estimate of 56% is not only possible, but likely. In fact, it may be understated. I will use the 56% growth for calculation, since it is accepted and published. I do not care about trailing ratios as they suggest selling and this has been unwise.

I did not say the PEG ratio was 52. I said the PEG ratio will be less than one (1.0). Far different than you quoted me. PEG ratio = P/E ratio divided by growth ratio. The 2011 year P/E ratio (in 25 days, i can wait) will be 47 based on average estimates. The growth ratio is 56. PEG=47/56=0.84. Any PEG ratio less than one is a bargain. PEG ratios greater than 2.0 are largely considered overvalued for growth stocks. PEG ratios between 1.0 and 2.0 depend on the strategist.

In summary, in 25 days BIDU will have PEG ratio of 0.84 a bargain by most standards. The only justification for this being overvalued on an earnings basis would be to question the 56% 5 year growth estimate. I personally believe this estimate. I believe the growth will be greater and will add to my position if price drops. Dec 05 11:51 AM Reply +10
Daniel Harrison Comments (120) Yes, thanks for the exchange of ideas. You are right: I meant an FY11 P/E, not PEG ratio. The problem with JUST using the PEG ratio as the singular valuation mechanism vs. also using the P/B and ROE is that the PEG eventually gets unstuck vs. today's P/E, as the growth rate of the company begins to trail off and the real P/E ratio gets unstuck. That's not just down to the company failing to hit estimates: it can also come from factors such as historically over-aggressive buying relative to earnings growth. It is my opinion that this is where we are now.

Either way, what price are you looking for in order to accumulate more shares? Dec 05 12:03 PM Reply 00
USAFORSALE Comments (37) Thank you for the correction.

I agree with you that an analysis of BIDU should not be limited to earnings. Also, I have made all my significant points related to earnings and hope to have justified my rationale for accepting new and higher price targets.

For me, other areas of accepting current share price and the possibility of share price appreciation is to investigate market capitalization, Price to Book Value (P/B). Dividend yield and sustainability is not worth studying since BIDU does not pay a dividend.

On P/B, I will concede your point. BIDU has a P/B ratio of 36 (you state 46). Either way this is very high. I suppose this is the risk I take. I do not know how the figures value intangible assets such as brand recognition. People as for "Kleenex" rather than facial tissue. People in the U.S. "Google it" to imply search. I dont' use ask.com or bing. com. I use yahoo as my portal for links and news and I use google for search (unless already in yahoo). People in Chine "Baidu It". I do not know if this is factored into book value. You are right, the book value is high and this is the risk I take. It can't be easy or everyone would get in.

On market capitalization, I assume a longer time horizon like 5 years. I am happy to ride the up and down roller coaster if it pays off in 5 years. I am not a trader. I believe (right or wrong) GOOG can double in 5 years. GOOG has a market capitalization of $183B. If I double that I get $360B. Since BIDU dominates 1/5 of world search (china) and GOOG dominates remaining 4/5 of world search the ratio of BIDU to GOOG is 1/4 [ 1/4=(1/5)/(4/5) ]. This gives a possible market cap for BIDU of $90B in 5 years. This is far greater price appreciation than the earnings analysis gave. However, I should discount for GOOG position in Android OS and other areas BIDU does not have. However, search still dominates GOOG revenue. Other authors have pointed out the larger unreachable internet areas of China compared to the US. If that were the comparison we would also use the population ratio of U.S. to China. However, I am using global population ratio of China to world (1/5). Therefore I must assume global internet usage for GOOG. Just as China has unreachable internet users in rural areas so does GOOG in world (Africa, Siberia, Tundra, etc).


I have to run now so I cannot comment on ROE.

In summary, you are right of high P/B and I accept that risk based on my market cap and earnings analysis.

Oh yeah (your question) I will scale into BIDU at 105 or less. 106 would temp me. I would buy larger percentages as price got much below 105. I will scale in even at the current price. Dec 05 12:58 PM Reply +10
Joe from the Beach Comments (55) The one reason why stock values vary is growth expectation. Looking the big four stocks, growth expectations. Baidu is on top as it’s likely to be the Google of China. Microsoft is so big that its growth prospects are limited at is at the bottom of growth expectations.

Google in the middle of this with market recognition of its growth potential.

The interesting company for those of us in Yahoo. Yahoo makes money now, close to a billion. It also has very significant Asian assets. These assets, minority interest in Yahoo, Japan, and the Alibaba Group. The Alibaba Group, according to Wikipedia:

"Companies in Alibaba Group:
§ Alibaba.com (HKSE: 1688) - publicly traded company in e-commerce for small businesses
§ Taobao.com - online retail marketplace
§ Alipay - third-party online payment platform,
§ Alibaba Cloud Computing - advanced data-centric cloud computing services platform
§ China Yahoo! - a leading Chinese-language internet portal
§ Alibaba UK - a online retail marketplace specifically for UK buyers"

The growth potential of the Yahoo Asian assets has to very high, so Harrison implies this in his article. And alpha seeker out there should take heed. Dec 05 10:17 AM Reply +40
Ajoy Comments (13) Measures such as P/E are to be used in a context. In Baidu's case that context is one of projected growth at average 50% for several years ahead, riding the coattails of China's expansion. A P/E of 90 is not particularly high for a company that small with that potential. Two years ago, Amazon had a P/E of 100. That was no bubble.

Baidu's P/E is high not so much because the markets expects accelerating growth, but because it sees sustained growth for about a decade. The risks looking that far ahead are far less than for comparable startups in the US, primarily due to lack of competition, good government relations, an entrenched user base, and the successful model of Google they can emulate. The world does not end in two years, and PEG models assuming we should look ahead two years holds in most cases in developed countries, but not necessarily where the outlook is clearer farther into the future. And only those paid by short-sellers or Google compare Baidu's market cap to Google, Yahoo and Microsoft, all companies which have saturated their market and are looking at other growth opportunities. Dec 05 12:03 PM Reply 00
511southkstreet Comments (9) ...the problem is you are trying to look at Baidu as a value stock and use value metrics when attaching a price. It is not....it has not matured nearly as much as the stocks you have mentioned. That would be the equivalent of doing the same thing with google in the beginning when it was going hyperbal and if you had used that as a reason not to purchase you would have lost out on making a ton of money and after all is that not the reason we are here to begin with?? Dec 05 12:30 PM Reply +20
cha*****aba Comments (2) Maybe the author is trying to scare us into selling our Baidu holdings so he and his associates can buy in more cheaply?
Baidu is at the point of becoming more expensive again. I do not think this article will stall Baidu's rise.
Nice try.Daniel. Dec 05 02:22 PM Reply +2-3
Daniel Harrison Comments (120) This is actually quite an amusing comment. Dec 05 02:51 PM Reply +30
Mark Krieger Comments (263) Dan: what are the chances that the mighty Google will return to its Chinese Search operations? if that occurrs, how much could that event damage BIDU's share price? Dec 05 02:54 PM Reply +30
Daniel Harrison Comments (120) See, this highlights another risk with buying BIDU at the current price. Not only are you assuming the risk inherent with chasing bloated valuations, but you are completely discounting the risk of competition.

There are lots of Baidu holders right now citing the Chinese government's protection of the co.'s monopoly as one of its valuation shields. But the officials at the top of the PRC have often often shown complete willingness to u-turn on favoritism and policy when faced with too much public outcry or a better deal. If Google (or yes, even Yahoo, via its Alibaba partnership) strikes a bargain with them, it has a much greater amount of capital at its disposal to compete. Dec 05 03:05 PM Reply 00
Andeli Comments (39) I doubt very much that Google will return. The bureaucracy does not trust Google, so they are dead in China. What could happen is that one of the SOEs creates a copy of Baidu and propels it to same succes in 4-5 years. Dec 05 06:21 PM Reply 00
LonnieL Comments (3) BIDU is a growth stock, YHOO is stagnate! YHOO management is non-existent in my opinion. Terrible. No comparison. I'll stick with BIDU! Dec 05 03:47 PM Reply +10
aromaking Comments (9) interesting article on a p/b yhoo takes the cake! as for msft, yoy they are not cutting it with google mildly stronger.bidu is chinese controlled and manipulated and their pe, roe can be anything the chinese say they are...how do we really know? again the chinese have complete control just ask google! i like my odds with yahoo &american companies!!!
malmut.com Dec 05 04:54 PM Reply +10
jroliver77 Comments (8) Chances are high that Google does go back into the war zone, or nibbles around it, but its exactly that a war and at least initially BIDU will win.

When looking at these super growth stocks with competitive advantage I believe increased market share, growth deals and PEG are supreme measures of valuation.

No one has brought up current technical reading, although this stock is always volatile it is about to breakout from a base and when this stock runs it hard to stop. Once this run is over than maybe you should cut some of your holdings. Until then don't be late for the ride. Dec 05 06:47 PM Reply 00
MarketShot Comments (7) I agree with some of your commentary, but unfortunately the general market and trend is generally moves contrary to present facts (see DECK's parabolic move recently) and takes the future into greater account.

Please see my insight below on why Baidu is actually a Buy right now at it's 52 week high:

"5 Reasons BIDU is a Buy at it's 52 Week High"
marketshotnyc.com/2010.../ Dec 05 08:10 PM Reply 00
malikai Comments (3) Nobody mentions the fact that Google never truly left china. They simply relocated their search site to Hong Kong. While the great firewall still restricts what people on the mainland can see, Google is not finished in China, as it is still accessible. I would also like to mention the fact that for whatever Baidu is, Google is still highly ranked with the young and students in china, the very people with disposable cash to spend on products advertised to them, while Baidu is more preferred by the more mature crowds in China, the people who do most of the saving.

I am not in Google or Baidu at all, but simply an observer who spends considerable time in Beijing. Dec 05 11:23 PM Reply 00
omamdouh Comments (6) MARCH BIDU MARCH !! Dec 06 01:16 AM Reply 00
mlundberg27 Comments (3) you are incorrect: ROE for $BIDU is 40%

It is also valued fairly with a PEG of 1.15, +100% EPS growth yoy, 70% sales growth yoy.

None of the other companies, including $SINA or $SOHU, come close.

Even if it were considered "overvalued" by value investors, there is minimal historical correlation between P/E ratios and price action.

You buy your $YHOO, I'll buy my $BIDU. Let's see where you are in a year...I'd love to see your portfolio and compare it to mine! $$

~Matt Dec 06 02:41 AM Reply 00
Djvu Comments (387) Facebook Market Cap $ 40 Bn. Go figure the valuations. Well these just some of the side-effects of a zero interest policy of the world`s so called biggest and advanced economies. Wow these valuations will make OIL look cheap at even $ 200. Dec 06 02:04 PM Reply 00
despaulttrade Comment (1) Folks, I'm strictly a 'technician', I don't even know why I'm adding my 2 cents worth, but with all due respect to all the folks who follow 'fundamentals', I just brought up the weekly chart for BIDU with Bollinger bands and a 'Slow Stochastics'. I drew a trendline from the close on January 29 2010 through the open on July 9 and July 23 and that line comes out to be about as close to 45 degrees as you can get. I find that ominous! And that line has not been violated, if anything, the angle from September 3 to date is closer to 60 degrees.
To me, a 45 degree line is unsustainable. A 60 degree line is more like "Get the heck away from there!" Dec 06 02:59 PM Reply 00
Balanced_options Comments (4) My view of bidu's recent run is that, it has a perfect story for the MMs to make big bucks from you, the average investors.

1. The story is good. China, the so-called China Internet Population, dominance due to GOOG exit, market cap/valuation comparison to GOOG (which in itself is a fallacy since GOOG has technologies and innovations, other than search, BIDU does not, but I digress).
2. A company indeed with good earning track records, possibly the mgmt team working in concert with the MMs.

If you look at the hourly price charts since it's 10-1 splits, and the amazing option volumes for both weekly and monthly options.
you'll understand why BIDU is the darling of Wall street.
Every week before Dec when they stop offer weekly options, you'll see this constant reply of the game of "pump the stock and dump the OTM options, then flush the stock and sweep up the OTM options".

My reading of the 10-1 split is not the bullsh*t argument of 'making it more affordable to the general public". It's for the MMs to make more money out of its option market! Otherwise, why is it that a Chinese ADR will constantly command top spots on the option active list, along with companies like BAC, C etc.
Even GOOG and AAPL do not enjoy such elite status....


There's really no point looking at BIDU from valuation viewpoint, it does not matter. As long as they're with no creditable competitors in China, and as long as they can maintain the 1 to 2c earning beats, the con game will continue.

All I am saying is, buyer beware!