Baidu’s uninspiring debut at Hong Kong shares casts doubts on the tech company’s venture into electric cars
Chinese internet search giant and technology company, Baidu, announced it was dipping its hands into the electric vehicle (EV) market to provide intelligent driving capabilities for Geely’s green cars. The company has also been pursuing artificial intelligence (AI). According to analysts, the firm recently debuted its shares in Hong Kong, but the stock was uninspiring.
The Beijing-based company, founded by billionaire Robin Li, raised $3.1 billion for its secondary listings, and the stock upscaled by 0.4% by noon. Its shares were priced at HK$252 each in the past week and closed with a discounted price of $299.78 each. About 95 million shares were availed at the company’s American depositary receipts.
Li estimated net worth rose by 200% to a three-fold increase from $4.9 billion last year to $15 billion in 2021. As the rivalry between China and the United States intensify, companies are trading their shares back home, including Baidu. Other firms that turned to the Hong Kong listing include Autohome, Bilibili, and Tencent Music Entertainment Group.
Analysts have raised questions and believe Baidu should do more to convince investors that their money is safe with the new venture of electric cars and artificial intelligence. The AI guru has been experimenting with cloud computing and AI-aided self-driving to boost its revenue which largely depends on the search engine unit.
As the internet of things develops and metamorphoses into short video platforms, investors and advertisers are shifting with the flow. Video exchange platforms such as Douyin and Kuaishou have been sought out more as internet users shift their time towards them.
“Advertisers have been allocating more of their budgets to short video platforms, and Baidu is losing market share. It is this era of short-form video now, but Baidu isn’t operating this business very well,” revealed Zhang Xueru, an analyst at 86 Research.
Despite its market woes, Baidu has advanced in AI technology. Since November last year, its Nasdaq-listed stock began to rise. The company’s “non-online market revenue” increased by 14%. According to New York-based asset manager Ark Invest, the non-online sources include autonomous driving sales, computing, and other software procurements.
Li’s firm’s no marketing revenue rocketed to $645 million, a 52% increase from the 2020 returns. Total returns, including online advertisements, hit a $4.6 billion high in 2021, a five percent increase from last year. After the tech giant announced a partnership with Geely automaker, some critics thought this was a risk. Chinese EV manufacturing is very competitive right now, with top-rated firms like Nio and Xpeng fighting for top seats.
“Baidu aims to conquer smart transport, but search engines aren’t automobiles, and China’s EV sector is already fiercely competitive and over-capitalized. The company seems to realize that a successful HK listing may require attractive pricing,” said Brock Silvers, Hong Kong-based Kaiyuan Capital Chief Investment Officer.