Baidu: Delisting Fears Overplayed

 

  • Baidu faces a delisting risk due to the HFCA Act where U.S. regulators want access to Chinese audits.
  • The company has 2 more years to meet audit requirements.
  • The stock is exceptionally cheap at only 9x forward EBITDA estimates due to a massive cash balance.
  • This idea was discussed in more depth with members of my private investing community, Out Fox The Street. Learn More »
Over the last month, the Chinese stocks have traded in a wild fashion due to fears the shares will be delisted from U.S. stock exchanges. The risks to Baidu (NASDAQ:BIDU) appear far over stated. My investment thesis remains very Bullish on the Chinese tech stock leading in autonomous vehicle technology, but Baidu definitely faces a volatile few years.

Read the full article on Seeking Alpha. 

Disclosure: Long BIDU. Please see the disclosure page for more details. 

Update - Apr. 29

Big AV news for Baidu. The stock just isn't valued for this division. 
  • Baidu (NASDAQ:BIDU) received the first-ever permits in China authorizing the company to provide driverless ride-hailing services to the public on open roads in Beijing.
  • With these permits issued by the head office of the Beijing High-level Automated Driving Demonstration Area, ten autonomous vehicles without drivers behind the steering wheel will offer rides to passengers in a designated area of 60 sq. kms in Beijing.
  • These licensed cars will join an existing fleet provided by Apollo Go, Baidu's autonomous ride-hailing service.
  • Currently, Baidu has the largest autonomous driving fleet in China; company plans to add 30 more such vehicles at a later stage, expanding its fleet to provide more convenient driverless services to the public.


Update - Apr. 21

While the delisting fears are far overplayed, Baidu is falling with all of the other tech stocks on rate and recession fears. The test of the yearly lows is up next and likely offers a monster buying opp. 

Finviz Chart


Update - Mar. 31

As predicted, Baidu got added to the HFCAA list for delisting. The company and the Chinese government is now on the 2-clear to solve the audit issue. 

-Baidu (NASDAQ:BIDU) said on Thursday that it was "actively exploring possible solutions" after the Securities and Exchange Commission added the Chinese internet giant to a list of companies that could be delisted from U.S. exchanges.

-"Baidu will continue to comply with applicable laws and regulations in both China and the United States, and strive to maintain its listing status on both Nasdaq and the HKEx," the company said in a statement.

-The company added it was notified by the SEC that it could possibly be delisted under the Holding Foreign Companies Accountable Act, or HFCAA, on March 30.

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