Can self-driving save Baidu?
These days, $Baidu(BIDU)$ 's Apollo GO is all the rage. It's blowing up on short video platforms with tons of users sharing videos, and folks are joking that soon even ride-hailing won't stand a chance!
Apollo GO Firing!
News reports claim Apollo GO has already racked up 5 million orders, hitting over 20 orders per day at peak times in Wuhan!
What does that mean? Well, your average taxi driver in Wuhan handles about 20 rides a day. In other words, in Wuhan, self-driving taxis are matching traditional cabs.
Moreover, the data show that Wuhan citizens' satisfaction with the travel service of fully driverless vehicles is generally high. Apollo GO's app boasts a whopping 4.9 satisfaction rating, with 94.19% of users giving it a full 5 stars.
In addition to Wuhan, Beijing, Shanghai, Shenzhen and other 11 cities have carried out fully unmanned autonomous travel service testing, superimposed $Tesla Motors(TSLA)$ maybe released on August 8 Robotaxi, is expected to further catalyze the development of the industry.
Saving Baidu!?
Apollo GO isn't new news for Baidu. Every financial report, Baidu will display data separately. According to this year's Q1, Baidu's self-driving service hit about 826,000 auto-drive orders, an increase of 25%. By April 19, 2024, it already clocked over 6 million trips for the public.
From this point of view, the cumulative order of more than 5 million in the news is already old news, and it suddenly exploded, which is incredible.
But regardless of the motives behind the hype, can this self-driving biz rescue Baidu? How sustainable is today's 10% rally?
On May 15, Baidu's head of self-driving, Chen Zhuo, at Baidu's "Apollo Day 2024," said Apollo GO has been very close to the critical point of break-even. The goal is to achieve break-even in Wuhan by the end of 2024, and fully enter the profit period in 2025!
The forecasts from management are encouraging, but will Baidu have the last laugh in the race for self-driving?
Whether it's Tesla's FSD in China or heavyweights like Huawei, $NIO Inc.(NIO)$ , and $XPeng Inc.(XPEV)$ pumping big bucks into self-driving, Baidu's not the only player.
Moreover, although Apollo GO is the first layout, car companies have a large amount of user data in the field of autonomous driving, and the technical strength is not necessarily inferior to Baidu.
Take Baidu and $Geely Automobile Holdings Ltd.(GELYY)$ 's car venture JIDU—a market no-show, no match for Huawei's smart driving set-up. So, when competition intensifies, how profitable will self-driving taxis be? It's an unknown!
Stock buyback?
Compared to ride-hailing, Baidu's core biz fades—Q1 revenue growth just 1.2%, lowest since the pandemic's end:
Against $Tencent Holding Ltd.(TCEHY)$ 's 6.3% and $Alibaba(BABA)$ 's 6.6%, Baidu is the worst performer among Internet companies! Its stock price has fallen below the new low since the release of ERNIE Bot!
Although the stock price is depressed, and Baidu's books lie nearly 200 billion cash, but It does not pay attention to shareholder returns, the first quarter buyback amount is only $230 million, 2023 the whole year is only $900 million.
Come on, as the most miserable Internet company, with no shortage of money on its books, how can it be so indifferent to its stock price?
In contrast, Tencent, $MEITUAN(MPNGY)$ , $KUAISHOU TECHNOLOGY(KSHTY)$ and other companies have increased the amount of buybacks, Baidu this cash is going to be under the baby?
No, in terms of expense rate, Baidu's R&D expense rate is as high as about 17% all the year round, which is the top existence among Internet companies:
ERNIE Bot?
But what has so much money been spent on?
Who is the hottest big AI model this year? It is estimated that many people will return to kimi, as for ERNIE Bot, it seems that it has been lukewarm since its release! When Kimi was hot this year, its server crashed several times, causing related stocks to soar.
In addition to ERNIE Bot, Baidu can take hand is Apollo GO. Will Apollo GO follow the footsteps of ERNIE Bot? Baidu up early again, catch a late set?
After all, the previous O2O, all in AI and smart cars, all washed? Perhaps, Baidu's biggest advantage now is the low valuation, the price-earnings ratio is only 12, a new low since the listing:
Such a low valuation, as long as a little buyback, or control expenses, the share price will not be so ugly.
Vigorously increase the new business, it is not impossible to save the stock price. Hope no flop!
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