Baidu contemplates exiting the Nasdaq to increase its valuation
Baidu Inc, the Chinese search engine giant, is considering de-listing from the US Nasdaq and shifting to an exchange closer to home to raise its valuation in the face of growing investment uncertainty between the US and China.
Sources told Reuters that Baidu, one of China’s earliest US listings, is reaching out to some trusted advisers to see how best it could be done if it were to progress, including looking at issues around funding and any regulatory reaction.
The talks are at an early stage and subject to change, said the sources, who spoke on condition of anonymity because it is not a public matter.
Baidu refused to comment.
Co-founder and chief executive Robin Li, who told the state-controlled China Daily on Thursday that Baidu was paying careful attention to the tighter US regulation of Chinese companies listed in the region, pointed to the company’s remarks.
“For a reputable company, there is a lot of choices for listing, not limited to the US,” he told the newspaper.
The sources said Baidu felt it was undervalued on the New York Nasdaq exchange.
Shares of Baidu have dropped by more than 60% since their peak in May 2018, while the Nasdaq Golden Dragon China Index, which tracks Chinese companies listed on the US market, has lost less than 10% during the same period.
As of Wednesday’s close, Baidu’s market capitalisation of US$ 29.59 billion is just 5% of Alibaba’s market valuation, which has shares listed in Hong Kong and American Depository Shares listed in New York.
Reuters announced in January that Baidu, Ctrip and NetEase Inc have all held informal talks with Hong Kong Exchanges and Clearing on a potential secondary listing to follow Alibaba in setting up an investor base closer to China.
Baidu’s latest move also comes as US-listed Chinese companies endure increased pressure amid increased tensions between the world’s two largest economies.
On Wednesday, the US Senate passed a bill that could stop some Chinese companies listing on US exchanges unless they follow US audit and regulatory standards.
The move is seen as an escalation of a long-running conflict between Washington and Beijing over making Chinese audits open to US regulators.
Last week, despite pressure from the White House, a board overseeing the Thrift Saving Program, a retirement scheme for US government employees and service veterans, indefinitely postponed proposals to invest in certain Chinese enterprises.
At home, Baidu struggled with a slowing economy and growing pressure from domestic players including ByteDance, the owner of popular TikTok video-sharing app. ByteDance launched a search engine in China last year and entered a sector traditionally dominated by Baidu.
Baidu, headquartered in Beijing, reported this year’s first-quarter revenue decline of 7 per cent. While its revenues were better than expected by analysts, it was the most significant year-on-year decline since the company went public in 2005.
Baidu generates the bulk of its revenue from digital marketing channels, including searches, news feeds and video applications.