Baidu Makes Impressive Gains for Second Straight Day After Announcing Purchase of PPS

Michael Teague |

Baidu, BIDU, chinese internet stocksChinese-language internet search service Baidu (BIDU) continued to gain on Tuesday as the company announced its acquisition of the Shanghai-based online video company PPS for $370 million.

Shares for Baidu closed yesterday up 3.7 percent to $87.65, and rose over 2 percent on Tuesday to as high as $89.88.

The acquisition is expected to be finalized during the current quarter, and is especially significant for Baidu as it allows the company a greater range of motion in its competition with China’s other dominant video site Youkou-Tudou. The company will integrate PPS into its own already-existing video service iQiyi, making it China’s largest video provider for mobile.

In terms of industry consolidation, the move harkens back to Google’s (GOOG) $1.65 billion 2006 acquisition of YouTube. It is also an echo of Baidu’s purchase of iQiyi which began as a joint investment between the former and Providence Equity Partners, and ended with Baidu’s buying-out of Providence’s stake late last year.

Youku-Tudou itself was created as a result of a merger last year, while the e-commerce company Alibaba just last week purchased a significant stake in the Twitter-esque service Weibo. Yahoo! (YHOO) owns 23 percent of Alibaba.

iQiyi CEO Gong Yu highlighted the “strong technology DNA” of both his company and Baidu, and went further to say that the move “lays a solid foundation for iQiyi to become a great technology company with strong media DNA as well.”

The acquisition is also a sign that Baidu, who went unchallenged for many years as the Chinese internet search engine, is feeling a certain amount of pressure from increasing competition. On Monday, Qihoo 360 Technology (QIHU) spiked some 8 percent to close the day at $37.30. Qihoo went public a little over 2 years ago, grabbing 10 percent of the market almost instantly.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
BIDU Baidu Inc. 182.07 -0.16 -0.09 2,183,424
GOOG Alphabet Inc. 777.29 2.28 0.29 1,583,394
QIHU Qihoo 360 Technology Co. Ltd. American Depositary n/a n/a n/a 0
TLYS Tilly\'s Inc. 9.39 0.51 5.74 186,066
YHOO Yahoo! Inc. 43.10 0.53 1.25 10,373,957

Comments

Emerging Growth

H-Source Holdings Ltd.

H-Source Holdings Inc. is a technology company operating within the healthcare industry through its subsidiary, H-Source, Inc. The Company has developed a transaction platform that provides a private, secure and…

Private Markets

Trustify

Trustify provides trust and safety in both the digital and physical worlds through our vast network of on-demand Private Investigators.By removing the large retainers and high hourly rates that traditional…

Airbnb

Airbnb is a community marketplace for people to list, discover, and book unique accommodations around the world — online or from a mobile phone. Whether an apartment for a night,…