Tonight we’ll get to see if Baidu.com (NASDAQ:BIDU) was all hype or if it can live up to its hopes. It has a hundreds of millions of persons opportunity. But it also has a greater than $11 Billion market cap and valuation of nearly 30-times 2008 revenues. If it hits 2007 ($2.22) and 2008 ($3.80) targets on EPS at a $344 price, it has forward P/E’s of 155 and 90 respectively. Its earnings conference call is not until 8:00 PM EST tonight.
Traders have been hiding out using stock options each day to trade the stock because of the leverage and the high share prices. Options are pricing in more than a 13% stock move today in either direction and a $340.00 straddle late in the day would cost roughly $60.00. Analysts are way behind the stock because of the stellar performance, and the average price target is down close to $250.00. We won;t even comment on the chart, because the monster stock surge has defied everything (including logic).
We have estimates at $0.63 EPS and $65.5 million plus on revenues, but with shares up 200% and then some this year and up 70% since the end of August we’d expect that a blowout must occur. Next quarter estimates are $0.70 EPS on $75.7 million revenues.
Since this has defied logic, we won’t try to apply logic to it. You have to know there are hopes for another stock split too.
- Cramer called this one a "Cheap Expensive Stock"
- 24/7 Wall St. also showed some lessons of Bubble valuations
- It ran 8 days in a row, and continued on up….
Jon Ogg is the editor of the 24/7 Wall St. Special Situation Investing Newsletter; he does not own securities in the companies he covers. Free email sign-ups can be accessed here.
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