Baidu Troubles Mount: Analyst Downgrade, Chart Failure, and Put Options

Baidu, Inc. (NASDAQ: BIDU) is supposed to be a winner in the war for Chinese internet search.  But that is not going to put it in good company if the growth of China keeps slowing and if the accusations that China’s growth numbers are grossly inflated are real.

Now a late-morning analyst downgrade from Deutsche Bank is taking some steam out of the Chinese search engine giant.  At 12:05 PM EST we have Baidu shares down 5.5% at $116.05.  The stock was above $121.00up until about 11:30 and shares have yet to tick up. The trading volume is over 6.2 million shares against what is now just a 4.2 million share average daily volume.

Things have gone weak in the options trading game as well.  The $115, $120, and $125 call options expiring tomorrow saw more than 12,000 contracts combined in trading but the puts with a $110, $115, and $120 strike price have seen more than 15,000 contracts trade hands.  As a reminder, it is 10,000 contracts which equate to another 1 million shares on a fully leveraged basis.

Before the effects of that Baidu downgrade, Thomson Reuters has a consensus price target of about $169.00 on Baidu and the 52-week trading range is $99.71 to $154.15.

Keep in mind that Baidu’s 50-day moving average is $118.56 and the stock fell under the 200-day moving average of $127.65 just earlier this week.

JON C. OGG