Message #8 From:
Jason Date: August 11, 2005 07:01:33 PM
Looking at BIDU DD
BIDU will rise much higher. Reasons:
I have been investing in "hot" IPOs for many years and have done well by avoiding the LONG, INCX, and others of the world.
The ones that have won out after reasonable corrections have been those that lead in key areas and turn profitable.
BIDU's share price will rise much higher because:
1. The extraordinary P/E is meaningless as earnings growth will quickly bring that down to earth.
2. The company is profitable unlike many of the high flyers in the late 90s.
3. The correction over the last few days has been a reasonable one--and the kind Google went through as the main institutional and insider selling took place. But the key entry point based on volume is at $80 and $90, which is why this stock has stabilized.
4. $4mn float would allow a quick spurt up at minimum on decent newsflow that has yet to begin.
5. Lack of shorting ability
6. Speculation about potential Google or other M&A considering the Yahoo deal. GOOG has shares of Bidu because Bidu is the GOOG of China.
What price is reasonable? That is not the right question. The question is about future potential. As the leading search engine in China, the potential is huge, hence the best IPO in 5 years. Eventually that idea will likely played out over the next few years. On that basis alone, there is no reason to fear much downside on a long-term basis.
