Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Baidu surges after stock split

By Blake Ellis, staff reporter


NEW YORK (CNNMoney.com) -- Shares of Baidu soared in afternoon trading Wednesday after the Chinese search giant split its stock 10 to 1.

Baidu (BIDU) jumped about $6, or more than 8%, to $77.37 a share.

Before the stock split, which increased Baidu's shares outstanding and cut the per-share price by more than $600, the company's shares were trading around $700 each.

"The shares became much more available to a wide audience," said Andrey Glukhov, an analyst at Brean Murray, Carret & Co. "So all of a sudden, if you're a retail investor, these investments became a lot more affordable."

Investors were also drawn to Baidu after its largest Chinese search competitor, Tencent (TCTZF), released first-quarter earnings Wednesday and hinted that its search initiative will continue to take a while to complete, said Glukhov.

"This reiterates in the mind of investors that with Google's departure from China, Baidu is very well positioned," he said.

Baidu's stock split comes only weeks after the company announced that its profit had more than doubled since January, when rival Google first announced that it may leave China.

When Google decided to move its servers out of mainland China and announced in March that it would stop censoring its search results in the country, Baidu gained significant share of the Chinese Internet search market.

At the end of last year, Google had 36% of the market share and Baidu had about 58%. But in the first quarter alone, Baidu gained an additional 6% of the market, and Glukhov said the company is on track to eventually capture more than half of Google's total market share.

And even as inflationary pressures loom and investors worry that China's red-hot growth may cool, Glukhov doesn't expect Baidu to lose momentum any time soon.

"China is arguably one of the world's fastest growing economies," he said. "Even if it cools off some, it's still going to be one of the fastest growing economies, so I don't think the investor audience is concerned about that."

While Baidu's advertising business would naturally be affected by a slowdown in growth, Baidu will still be able to outperform the broader advertising market, Glukhov said.

Year-to-date, Baidu has risen more than 88%, while shares of Google (GOOG, Fortune 500) have dropped about 18%. To top of page

Index Last Change % Change
Dow 15,973.84 313.66 2.00%
Nasdaq 4,337.51 70.67 1.66%
S&P 500 1,864.78 35.70 1.95%
Treasuries 1.75 0.10 6.33%
Data as of 4:43pm ET
Company Price Change % Change
Bank of America Corp... 11.95 0.79 7.08%
General Electric Co 28.26 0.81 2.95%
Cisco Systems Inc 25.11 0.43 1.74%
Chesapeake Energy Co... 1.59 -0.19 -10.67%
Freeport-McMoRan Inc... 5.53 0.64 13.09%
Data as of Feb 12
Sponsors

Sections

In India and other polluted countries, finding talented corporate executives is tough. Is the water contaminated? Is the air toxic? If yes, execs will say "no thanks." More

India's finance minister isn't worried about jobs being lost in the country's manufacturing sector despite warnings that industrial robots will dramatically reduce the need for factory workers in coming decades. More

Eastern Illinois University laid off 198 staff members this week, and the college president is blaming the state government. More