Tan Kin Lian - Investment Journey Baidu shares fell 10% on 4Q results
Baidu (9888.HK) shares were trading at HK$110 on the release of the 4Q 2023 results. The results were positive, based on several news reports. However, the stock fell 10% over the next two trading days and ended at $99.5. 

Here is a new report. 
https://finance.yahoo.com/news/2-baidu-revenue-grows-6-104822274.html

According to this report, Baidu performed slightly better than analysts forecast in respect of revenue, earnings and other measures. Several reports from other financial media presented the same positive stance.

Baidu is considered the Google of China. Here are some metrics of these two stocks. 

                                  PE Ratio         Gain 12 months
Baidu            BIDU       17.22                 -33.4%
Alphabet       Goog       23.69                 +46.3%

Based on PE ration, Baidu is 37% undervalued compared to Alphabet. 

Why does Baidu stock fall 10%, when the 4Q results are better than expected, and the stock is undervalued compared to Alphabet?

I believe that this is due to the action of the hedge funds that hold a large share in both stocks. These hedge funds are mostly based in America. By selling a stock aggressively, they can cause the stock to drop sharply. This caused other investors, i.e. institutional and individuals, to follow with the selling. 

I suspect that the hedge funds may be acting to achieve a geopolitical goal. They may wish to bring down the China stocks for geopolitical reasons, for example to prove that the American economy is performing better than the China economy. If this is the case, it is likely to have a short term impact as China may ask its state owned enterprises to buy the undervalued stocks. 

This is just my opinion. 

Tan Kin Lian 
 

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