Why Baidu Stock Dropped After Earnings
Shares of Baidu (NASDAQ: BIDU) stock slumped as much as 5.5% this morning, despite beating earnings estimates in its first-quarter 2024 report. Analysts forecast the Chinese internet search giant would earn $2.18 per American depositary share (ADS), adjusted for one-time items, on $4.3 billion in revenue, but Baidu actually earned $2.76 per ADS on sales of $4.4 billion.
As of 10:55 a.m. ET, Baidu is clawing back its losses, but still down about 1%. Is that fair?
Actually, yes, it is fair. Although Baidu beat analyst forecasts for pro forma earnings, the company's earnings as calculated according to generally accepted accounting principles (GAAP) fell substantially below the pro forma number -- and below the analyst forecast as well -- only $2.06 per share. These earnings also declined 6% year over year.
Source Fool.com
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