Baidu (BIDU stock) earnings stride past consensus, autonomous vehicles receive testing approval

• Baidu reported earnings that beat on top and bottom lines.
• BIDU stock remained flat in the US market despite reporting profitable quarter.
• Company received government approval to begin testing autonomous vehicles in China.

Chinese search leader Baidu (BIDU) offered up a quite pleasing third quarter for shareholders despite a period in late 2022 when the constant spectre of covid shutdowns has dealt a poor hand to Chinese equity prices. BIDU stock only advances 0.5% to $95 on the Nasdaq in Tuesday's premarket despite also receiving Chinese government approval to begin testing autonomous vehicles. 

Baidu stock earnings

Baidu reported non-GAAP earnings per American depository share (EPADS) of $2.37, which was 17 cents or 8% ahead of Wall Street consensus. Sales of $4.57 billion were just 2% above last year's figure, but of course, the US Dollar greatly outperformed the Chinese Yuan during that period. Still, the revenue figure for Q3 was a solid $100 million, give or take, above what analysts had expected. This was partially due to the Baidu AI Cloud growing revenue 24% YoY.

The search giant's growth has greatly diminished of late, but there were still positives to digest. One was the company's Apollo autonomous driving project continues to make strides. It announced receiving the approval of the necessary Chinese authorities to begin to test its technology on public roads.

"Apollo Go continued scaling up its operation, completing more than 474,000 rides in the quarter, further strengthening its leading position in the global autonomous ride-hailing market," said Robin Li, cofounder, and CEO of Baidu.

Adjusted core operating income for the quarter arrived at $935 million, and Baidu reported its adjusted core operating margin was 26%.

"In the third quarter of 2022, Baidu Core's non-GAAP operating profit increased by 14% YoY to RMB6.7 billion despite that the resurgence of COVID-19 pressured revenue performance, " said CFO Rong Luo. "This achievement is attributable to our relentless efforts in cost optimization and operational efficiency."

One detail that left the market less enthused was the results from iQIYI, one of Baidu's primary investments. iQIYI reported 101 million subscribers at the end of the quarter, which was a decline from 104.7 million in Q3 2021.

Baidu stock forecast

The Q3 earnings will not be enough to push Baidu stock back above the $100 psychological level. Besides psychology for traders, or maybe because of it, a lot of price action in both October and November respected this price level. Above $100 Baidu stock faces not much resistance until $125 – the swing high from early October. China will need to end its Zero Covid policy before Baidu stock can again even think about these levels.

With the market hand-waving away the results, BIDU stock may search for support at the 9-day moving average, which is currently at $92.34. Below here the 21-day moving average sits just below $86. The $82 level, the low from the covid sell-off in March 2020, was not respected in late October. This means a longer-term support level is likely nearer to the recent low between $75 and $76. 

BIDU daily stock chart