In less than two months, Baidu's share price has fallen from the high of $186.22 on April 8 this year to nearly half of the current loss, and the market value has shrunk to $33.7 billion.
This means that the current Baidu share price has already penetrated the performance of many public opinion crisis events. On January 11, 2016, Baidu Post Bar was exposed to the "hemophilia was sold" incident. Since then, Baidu's share price has fallen all the way, and it dropped to $139.61 on February 9. At the beginning of May of the same year, the "Weize Zexi incident" detonated public opinion. Baidu's share price dipped from the high of $201 on April 29 to $158.38 on May 12.
Today's stock price downturn is a response to Baidu's current and future performance prospects. Baidu’s first quarterly loss since its listing in the first quarter of this year, Q2 revenue guidance is also lower than expected. As the core search service and transaction service business of Baidu, the operating profit in the first quarter was 1.1 billion yuan, down 80% year-on-year.
However, with the sluggish performance, Baidu is also constantly changing. At the same time as the earnings report was announced, Baidu announced that it had resigned from Hailong as the senior vice president of Baidu and the president of the search company. Baidu search company also transformed into a mobile eco-business group (MEG), which was promoted and fully responsible. In the next two weeks, Bai Wei, general manager of Baidu Smart Life Group and Wang Haifeng, head of Baidu's technology system, were promoted to vice president and CTO respectively.
What kind of future will Baidu have to change?
The end of the PC search era
The departure from Hailong is almost always an accident for both inside and outside Baidu. "I turned out to be a friend of the circle to know." A Baidu search company internal staff sent a report to the 21st Century Business Herald reporter. In his view, the departure from Hailong marks "an era has passed", that is, the era of PC search based on Web pages.
The demise of this era is wrapped in other people. At the end of March this year, Sun Wenyu, executive director of Baidu's core search department, was leaving the news. Soon after, Baidu insiders confirmed the news to the 21st Century Business Herald reporter. "The specific reason can only be guessed, maybe there is a reason for (sinking)."
This guess is not unfounded. On February 26 this year, Baidu announced the adjustment of the cadre rotation of the three vice presidents Shen Sha, Wu Haifeng and Zheng Zibin. Among them, Shi Quan is fully responsible for searching the company's user products. Wu Haifeng is fully responsible for searching the company's commercial products. Zheng Zibin is fully responsible for the CRM-based innovation business and continues to serve as the CTO of the search company.
One month after the rotation, Sun Wenyu was sent away. In the same period as Sun Wenyu’s resignation, her report to the superior Wu Haifeng, the latter’s report to the superior is to Hailong. "If you look at it in such a resumption, it is really a clue to go to Hailong." Some insiders close to Baidu told reporters.
Others who participated in the 2019 Baidu Alliance Eco-Partners Conference recalled that the keynote speech to Hailong at this conference was out of standard and less dry goods. "I think now, maybe his mentality has changed, just Walked through the scene." The time for Hailong to attend the conference was only one week away from Baidu’s official resignation.
According to reports, in addition to Hailong, Wu Haifeng and Sun Wenyu, Gu Guodong, who is a veteran of the search company management, is directly responsible for the Baidu search company sales system before leaving the company. Among these people, Hailong worked in Baidu for 14 years, Wu Haifeng for 13 years, Sun Wenyu for 12 years, and Gu Guodong for 5 years. In other words, almost all of them left in the early years to follow the example of Xiang Hailong.
Some analysts believe that the departure of these people, especially from Hailong, will pose challenges to Baidu’s years of sales and channel systems. However, on June 2nd, Baidu has recalled Shi Youcai, one of the members of the startup team, as the head of the MEG sales system.
Many Baidu insiders told the 21st Century Business Reporter that there is no shortage of talents in Baidu Dashun. The question is how to make trade-offs from the end of the business ecology of the Web search ecosystem and the feed stream.
"Now the big search is changing, just because the ecology and the track have changed." The internal employees of the Baidu search company said, "The executives who are going should be still not suitable for the current development trend. Recently, the performance of the business has also been done. Not good, the company is taking the initiative to move the knife."
Sprint mobile business
The hero of the PC search era has stepped down to Hailong, responsible for the mobile phone business such as Baidu App, and the former search company has also transformed into a mobile ecological business group. Everything is Baidu’s signal to sprint the mobile end.
In fact, in the bleak new quarterly earnings report, Baidu’s performance in the mobile business is still somewhat interesting. According to the financial report, Baidu App's DAU reached 174 million in the first quarter, up 28% year-on-year; good-looking video DAU reached 22 million, up 768% year-on-year; smart small program's MAU reached 181 million, a quarter-on-quarter increase of 23%, and information flow users' usage time There has also been a substantial increase.
Overall, however, Baidu’s core business revenue growth rate was 8% in the first quarter, and revenue growth is expected to be between -2% and 4% in the next quarter. In comparison, last year's Q1 and Q2 Baidu core revenue growth rate of 26% and 28% respectively - leaving MEG to support Baidu's revenue pressure is not small.
“Baidu has been on the decline many years ago,” said a financial institution analyst who declined to be named to the 21st Century Business Herald. “Now, given the macro uncertainty, rising advertising stocks, regulatory tightening and personnel changes, we It is conservative on the short- and medium-term prospects of Baidu's advertising recovery and revenue growth."
Macro uncertainty is reflected in the entire Chinese Internet advertising market. According to CTR data, the overall advertising market in China declined by 11.2% in the first quarter of 2019, with Internet advertising revenue falling by 5.6% year-on-year. Affected by this, Baidu's advertising revenue in the first quarter was 17.66 billion yuan, a slight increase of 2.8%.
In addition to the overall advertising market slowdown, Baidu's advertising revenue decline is also related to increased competition in the industry, that is, advertisers are distributing the budget to related mobile products including Ali, Tencent and today's headlines. In response to competition, Baidu had to increase its content spending to attract users to use its mobile business, which led to a decline in its profit and profit margins.
Data shows that Baidu's GAAP net loss in the first quarter was 330 million yuan. Baidu's main reason for the loss was the marketing expenses during the Spring Festival Gala. In terms of traffic acquisition costs, Baidu invested 3.2 billion yuan in the first quarter, a year-on-year increase of 41%. In addition to the market itself, Baidu's advertising business revenue is still facing policy and public opinion risks.
However, some CITIC Securities research team members believe that Baidu's mobile terminal and information stream content are continuously optimized, and it is expected to accumulate momentum for the revenue growth after the market improves.
The future challenges of Baidu are also reflected in the stage of high investment and low return in the short term, including smart hardware and unmanned vehicles. "Commercialization is currently in our plan." Jing Hao, the vice president of the new Baidu, said in an interview recently, but he also said that the entire smart speaker business is still in the investment period. "At present, the most concerned is still Scale and word of mouth."
This undoubtedly means that Baidu will continue to experience the painful period of investment. "Personal work is still as usual, but in the face of current personnel changes, internal changes, there will always be some uncertainty in mind," the Baidu internal staff told reporters.