Baidu, the Chinese tech giant, saw its stock plummet 5.03% in Tuesday's pre-market trading session, as investors reacted to analysts' predictions of continued weakness in the company's advertising business and broader pressure on Chinese ADRs.
According to Citi analysts, Baidu's core ad revenue is expected to have dropped by 23% year-on-year in the third quarter. This significant decline is likely to weigh heavily on the company's earnings. The analysts anticipate this downward trend to persist into the fourth quarter, projecting a 19% decline in ad revenue. Despite maintaining a buy rating on Baidu and raising its target price to $166.00 from $143.00, investors seem to be focusing on the near-term challenges rather than long-term potential.
The plunge in Baidu's stock price is part of a broader decline in Chinese ADRs and tech stocks. Other major Chinese companies such as Alibaba, NIO, and PDD Holdings also experienced significant drops, with some falling over 4%. This widespread decline comes as the United States and China implement additional port fees targeting each other's vessels, escalating trade tensions between the world's two largest economies. The market's reaction suggests growing concerns about the impact of these trade disputes on Chinese tech companies operating in the global market.