Whoops . . . I recently said I liked Baidu at $92. Under a week later it has fallen to $73.88 before closing today at $79.75. The fact that Baidu did bounce back today quite quickly suggests this stock won’t stay down this low for long. We can see that a lot of demand came in at the bottom of today’s price which suggests many buyers who are not willing to see it stay that low [strong demand]. Nevertheless, I certainly wasn’t expecting to see Baidu at $73 ever again.
Countless Chinese stocks dropped roughly 20% today on the back of the news that Xi Jinping would retain his presidency and bolster his own cabinet with more like-minded people. You have to be careful anytime there is a large sell-off but I can’t think of any reason why this sell-off won’t soon be considered an exaggeration.
As we approach the final stages of the bear market, you ought to be careful investing in any growth stocks that are not under their 200 SMA. Baidu is not only arguably a stock with too high of a market cap to be considered a growth stock, but it is also a long way beneath its 200 SMA, suggesting as long as China remains similar to what it has been over the past few decades, Baidu should be considerably undervalued. If there is one reason to not invest in Baidu today it’s that some analysts suggest China is in a serious depression and Baidu isn’t a stock that has as much growth potential as EV companies like Nio and Xpeng. However, to compensate, Baidu seems self-reliant on its own AI and semiconductor partnerships and technology that do not require the US companies in any way.
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