Baidu Inc, a China-headquartered search engine titan, is taking into consideration moves to delist from the Nasdaq and shift to a closer-to-home stocks marketplace to bolster its value in the face of increasing friction over investments between China and the US, sources disclosed.
The sources told Reuters that Baidu, one of China's pioneering US stock market listings, is seeking a potential partnership with some trust-worthy advisors to determine how the listing could be carried out if the company were to proceed, which includes weighing key matters around financing and regulatory concerns.
Still to be finalized pending revisions, the discussions are at their initial phase, the sources revealed, who requested anonymity as the matter is confidential. Baidu Inc's shares were down lower late Thursday after reports that it was leaving the Nasdaq in the face of stringent listing criteria that US regulators are demanding.
According to Baidu chairman and chief executive officer Robin Li, in a China Daily story by Chen Jia, the group does pay close attention to the American government's unrelenting "tightening of regulations on Chinese companies' shares that are listed in the US," pointing out that Baidu is "discussing internally what we can do."
Sometimes referred to as the 'Google of China', the search engine powerhouse posted strong sales in the first three months this year, with Q1 Non-GAAP earnings per share of $1.25, surpassing analyst projections by $0.69. Baidu's $3.18 billion revenue dipped 6 percent compared to the previous period but easily exceeded the $3.1 billion market consensus.
After its earnings report, KeyBanc market strategist Hans Chung increased his price goal for Baidu, from $136 to $145. He said that although demand from advertising for its offline linked business has not totally made a rebound from the ongoing global health crisis, recovery is on course ahead of estimates.
US lawmakers recently approved a bill that could ban some Chinese firms from listing their stocks on Nasdaq or NYSE, and that they intend to apply more stringent auditing policies to these companies.
The push for heightened accountability for Chinese business firms follows not only the growing hostility between China and the US over the countries' reaction to the Covid-19 crisis but also recent moves to delist Starbuck's archrival Luckin Coffee, which has shed billions in market value since it was found to be involved in a bogus sales controversy early last month.
Meanwhile, Li stressed that they are not worried that the US government's policies and possible ban would have a negative effect on the company's operations.