Baidu, one of the more popular companies in China, is looking to do an IPO (Initial Public Offering) in the US. It has submitted documents to the SEC to get the ball rolling. There’s not a whole lot of information available just yet about the IPO, but the company is said to be valued at around $15 billion right now, but the proposed number of American depository shares have not yet been determined, according to Baidu’s statement.
In recent years, Baidu has been facing off against a number of other Chinese-competitors, like Alibaba and Tencent, which are both publicly traded companies in the US stock market. So this public offering would give Baidu the financial backing it needs to compete with both Alibaba and Tencent. Baidu is a bit like Google over in China, it has its hands in a number of products right now, including search, video, a food delivery service, and much more. In the fourth quarter of 2017, Baidu announced revenue of 23.6 billion Yuan (or $3.62 billion USD). This was largely due to its newsfeed product and search advertising. That beat analysts expectations, which were 23.1 billion Yuan. Net income for Baidu in the fourth quarter was 4.2 billion Yuan, also beating analysts expectations of 3.97 billion Yuan. So it’s obvious that Baidu is a profitable company, beating analysts expectations – although, just about every company has done that this past quarter.
By going public in the US, Baidu will be able to drop off some of its unprofitable businesses, like its food delivery business. It would also allow Baidu to spend more on content for its video service, which it spent about 82 percent more in 2017 than it did the previous year – which was around $1.13 billion. That’s a huge increase in the cost, and that is likely going to increase even more in 2018 and in the future, as more and more platforms are looking for exclusive, original content to compete against its competitors. That’s something the US is already seeing with the likes of Netflix, Hulu, and Amazon Prime Video. Baidu should be announcing more info about this upcoming IPO in the coming months.