Baidu Shares Fall After the Company Does This for the First Time

Shares of Baidu, a Chinese multinational technology company specializing in Internet-related services and products and artificial intelligence, saw its shares tumble this week after the company posted a net loss for the first time since its listing.

The Chinese search engine operator posted first quarter financial results that revealed a net loss of 327 million yuan ($47.51 million). This was the first loss since 2005. It is also compared to a profit of 6.69 billion yuan in the same period a year prior.

Revenue from online marketing services, a key contributor to overall sales, saw a growth of almost 3%, falling slightly short of analyst estimates according to FactSet. Total revenue grew 15.4%, matching estimates, according to data from Refinitiv IBES

Excluding one-off items, Baidu earned 2.77 yuan per American depositary share which came in behind the analysts’ 2.89 estimate.

The company has also forecast quarterly revenue below market estimates, saying a “challenging marketing environment” is sapping income from advertisers. Baidu has projected a second-quarter revenue of 25.1 billion yuan to 26.6 billion yuan. That compared with the 29.30 billion yuan average analyst estimate, showed data from Refinitiv IBES.

Shares of the stock fell as much as 8% in after-hours trading on the news.

Chief Executive Robin Li remarked that “given the current macro conditions, tighter government scrutiny on content, cut backs from the (venture capital) community, and so forth, we are taking a cautious view that online marketing in the near term will face a more challenging environment.”

“The pressure from newly emerged (short video) vendor Tik Tok is heating up in 2019, and Baidu must defend itself,” remarked TH Capital analyst Tian X. Hou in a report ahead of the earnings.

Hailong Xiang, senior vice president of the company’s search business has also resigned for “personal reasons.”

“Xiang has been with Baidu in the sales force for over 14 years, so when he leaves, you can imagine the internal impact it will have on the whole sales team.”

Disclaimer: We have no position in Baidu Inc. (NASDAQ: BIDU) and have not been compensated for this article.