In this briefing:
- Baidu (BIDU): Stagnant in 4Q18, Wrong Change Feeds a 24% User Increase to Google
- IQiyi (IQ): In 4Q18, Baidu’s Growth Engine Lost Control Over Content Cost
1. Baidu (BIDU): Stagnant in 4Q18, Wrong Change Feeds a 24% User Increase to Google
- Baidu posted a weak result for 4Q2018.
- We believe it is a wrong decision to change Baidu into an in-house search engine.
- Alphabet Inc Cl C (GOOG US) ’s monthly active users in mainland China increased 24% QoQ in January 2019.
- We believe Baidu’s stock price has been fairly impacted.
2. IQiyi (IQ): In 4Q18, Baidu’s Growth Engine Lost Control Over Content Cost
- We notice that the growth rate of cost of revenues exceeded the growth rate of membership revenues.
- We believe that the margins will continue to decline even if the advertising business recovers.
- IQ has the largest monthly active users in the video market, but it does not have an obvious advantage over Tencent Holdings (700 HK) .
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