The stock has been in negative Weekly RSI since a few weeks now...
Last time this happened in 2015, the stock had jumped up by 70% after it recovered. In terms of Risk/Return it looks very attractive as the bottom has been hit while the recovery can be significantly interesting.
Fundamentally the stock has been hurt due to global environment (china trade war / economic slow-down) and the business has for the first time seen a real slow down in revenue and earnings (especially due to investment in new tech)
However, currently the valuation fundamentally doesn't make sense.
If you include CTRIP, IQIYI and the 12.5bn cash position. It means that Baidu Core Search engine is currently valued at 10BN
This mean 1x Revenue Multiple / 2x EBITDA Multiple. Not seen many companies trading at 2x EBITDA multiple. Huge undervaluation due to sentiment..
Last time this happened in 2015, the stock had jumped up by 70% after it recovered. In terms of Risk/Return it looks very attractive as the bottom has been hit while the recovery can be significantly interesting.
Fundamentally the stock has been hurt due to global environment (china trade war / economic slow-down) and the business has for the first time seen a real slow down in revenue and earnings (especially due to investment in new tech)
However, currently the valuation fundamentally doesn't make sense.
If you include CTRIP, IQIYI and the 12.5bn cash position. It means that Baidu Core Search engine is currently valued at 10BN
This mean 1x Revenue Multiple / 2x EBITDA Multiple. Not seen many companies trading at 2x EBITDA multiple. Huge undervaluation due to sentiment..
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