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

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,778.15 421.28 2.43%
Nasdaq 4,748.40 104.08 2.24%
S&P 500 2,061.23 48.34 2.40%
Treasuries 2.20 0.06 2.61%
Data as of 5:56am ET
Company Price Change % Change
Bank of America Corp... 17.53 0.27 1.56%
Apple Inc 112.65 3.24 2.96%
Oracle Corp 45.35 4.19 10.18%
General Electric Co 25.14 0.71 2.91%
Microsoft Corp 47.52 1.78 3.89%
Data as of Dec 18

Sections

German chemicals company BASF has dropped a planned asset swap with Russia's Gazprom as Western sanctions bite. More

The shale boom has been a blessing to Texas, but tumbling oil prices are casting a shadow over the state. More

Portland's mayor says the city will create new rules, eventually allowing Uber to operate there. More

With two recent IPOs and a digitally-inclined audience of entrepreneurs, non-traditional financing could finally get its big break. More

Payday lenders are spending millions of dollars in Washington in an attempt to get powerful politicians on their side as a government crackdown on the industry heats up. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.