Internet Bubble 2| Baidu China

With amazement I read about the IPO of Baidu and the way the price of it’s stock has been going up. China is hot, sure. Internet was very hot one time, it is pretty much mainstream these days but it seems to be getting hotter again. Internet and China combined makes bloody hot although it is hard to find any reason why this combination justifies so much heat.

These two factors are likely the reason that the stock of Baidu has been trading at $ 154,- ?

That means that “..Baidu, which earned $1.4 million last year, is currently valued at $5 billion (based on the $ 154,- price), raising the question of whether we’ll ever learn not to let greed get the best of us and whether this company’s shares are likely to trade below $100 in due time.” source: Investors.com

I screendumped a chart from Yahoo Finance.


I am no financial wizard but it seems like a lot of value given last year’s earnings. Hell, even this website maybe worth something:)

To read some quotes of more informed persons, read the nice list of quotes compiled by
The China Net Investor (China unwalled version), which all seem to point in the same direction… BUBBLE

Also talk starts to spread that Baidu’s market share might be smaller than published.

Additionally there are some copyright lawsuits in progress as well as some new ones are pending .

Originally I wanted to take this topic a bit deeper but lack of time leaves you with the above. Just a short conclusion. Next to the over valued price of Baiduand the small chance they will actually will be able to live up to all the financial expectations etc. there is something else investors may want to consider. Internet in China is perceived as media. The media are supervised by the goverment. Regulations are changed at least once every year. Then again, if you like to gamble, something which is not allowed on the mainland, I suggest “BUY”

     
Posted Tuesday, August 9th, 2005 at 2:52 am,
View related entries in China Business, Chinese Multi Media.
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