Baidu (NASDAQ:BIDU) was trading over 17% lower today after the NASDAQ listed Chinese search engine after releasing quarterly results that were much lower than analysts' expectations.
On Monday night Baidu said it earned 3.66 billion yuan (about US$500 million), up 3.2% year on year, with 38.3% higher sales of 16.58 billion yuan.
The revenues were consistent with analyst estimates but earnings per share of 10.19 yuan, per American Depositary Receipt (ADR) fell below the 10.58 (ADR) expected by analysts according to a consensus by Thomson Reuters.
For the third quarter, Baidu expects revenue of between 18.17 and 18.58 billion yuan, lower than the consensus which is currently 18.79 billion.
The group explained its underperformance against its heavy investments made in an effort to diversify. In June it announced last month that it would invest $ 3.2 billion in new services.
Pacific Crest Securities and Brean Capital cut their recommendation on Baidu, respectively "overweight" and "hold", and others have lowered their price targets. But of the 31 brokers that follow the value, 24 continue to list it as a ‘buy’.