The Most Visited Web Site In China Is Up 8000% Since Its IPO


Chinese search engine, Baidu crushed estimates again and its stock is trading at new all-time highs near $220 this morning.

BIDU IPO-ed in 2005 at $27 per share, which is 2.70 on a split-adjusted basis. They had a 10:1 split in 2010. It was considered the hottest IPO of the year. $BIDU gained 350% on its first trading day, finishing at $112.5 (12.25 split-adjusted).


Over the past decade, BIDU never looked cheap. It was trading at a high P/E multiple all-the way from 2.70 to 220. Don’t be afraid to pay up for high-growth stocks with great potential. In many cases, they are expensive for a reason. Over time, earnings could more than catch up with people’s expectations and justify high valuations.

This is exactly what happened with Baidu. In the quarter before its IPO, it earned $8 million. In its latest 2014 quarter, Baidu earned $571 million.

The market is a voting machine in the short-term and a weighing machine in the long-term. Valuation matters in the end only if earnings don’t catch up, you plan to hold forever and you don’t have an exit strategy. If price gets you in a trade or investment, price should get you out. If you don’t know why you are in the trade, you won’t know when to exit.


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Ivan Hoff Blog