Baidu (BIDU) Stock Drops 13% After Weak Q2 Earnings and Morgan Stanley Downgrade
TLDR
- Baidu stock fell over 12% on Tuesday after reporting Q2 revenue of 31.33 billion yuan, missing expectations
- Online advertising revenue dropped 19% year-over-year, declining for eight consecutive quarters since Q2 2024
- Morgan Stanley downgraded BIDU from Equal-Weight to Underweight, slashing its price target 38.5% to $80
- Barclays also cut its price target to $96 from $124, maintaining an Equalweight rating
- AI cloud revenue grew 50% and GPU Cloud revenue surged 283%, but not enough to offset ad weakness
Baidu stock closed around $90.87 on Tuesday, down roughly 12% after the company reported second-quarter results that disappointed Wall Street. The stock is now down over 30% year-to-date and trading near its 52-week low of $84.82.
Q2 revenue came in at 31.33 billion yuan ($4.62 billion), a 4% year-over-year decline and slightly below the expected 31.95 billion yuan. Adjusted earnings per American depositary share fell 47% to $1.06, missing the $1.38 estimate.
The biggest drag was online advertising. Revenue there dropped 19% to 13.1 billion yuan ($1.94 billion) as Chinese advertisers pulled back on spending. That marks eight straight quarters of year-over-year declines in search advertising, stretching back to Q2 2024. The rate of decline has now accelerated to around 20% year-over-year.
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