Why Baidu Inc (NASDAQ: BIDU) stock is going gangbusters today

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Baidu Inc (NASDAQ: BIDU) stock rose over 7.74% (as of 9:42 am GMT-4 ; Source: Google finance) after the company posted better than expected results for the first quarter of FY 20. As the Covid 19 pandemic are now under control in China, the offline activities have rebounded and Baidu is going to benefit from a restart of the Chinese economy. In March, a month after the peak of COVID-19 new cases, Baidu’s traffic is strong with Baidu App DAUs having reached 222 million, which is up 28% year over year, in-app search queries increased by 45% and feed time spent up 51%. The company reported first-quarter net income of $6 million. At the end of March, 2020, the company’s cash, cash equivalents, restricted cash and short-term investments stood at RMB 146.7 billion ($20.72 billion), and cash, cash equivalents, restricted cash and short-term investments excluding iQIYI were RMB 136.7 billion ($19.31 billion). The company has generated free cash flow of RMB 1.7 billion ($233 million).

BIDU in the first quarter of FY 20 has reported the adjusted earnings per ADR of $1.25, beating the analysts’ estimates for the adjusted earnings per ADR of 54 cents, according to analysts surveyed by FactSet. The company had reported 7 percent fall in the adjusted revenue of $3.18 billion in the first quarter of FY 20, beating the analysts’ estimates for revenue of $3.1 billion. The company’s Core adjusted EBITDA rose 38% to reach US$0.7 billion, and adjusted EBITDA margin increasing 11 points to 30%.

For the second quarter, Baidu expects revenue to be in the range of $3.5 billion to $3.9 billion, while analysts project $3.62 billion. Baidu Core revenue is expected to grow between -8% to 2% year over year.

Additionally, the company has completed a bond offering of US$1 billion in April 2020, which comprised of US$600 million of 3.075% notes due 2025 and US$400 million of 3.425% notes due 2030. The funds raised from which are anticipated to be used to repay maturing bonds and for general corporate use.

Baidu has returned $185 million to shareholders in the first quarter of 2020, under the 2019 Share Repurchase Program, which will bring the cumulative repurchase total to about US$1.4 billion under the 2018 and 2019 Repurchase Programs. The company has recently approved a 2020 Share Repurchase Program effective until July 1, 2021, under which the Company may repurchase up to US$1 billion of its shares.

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