Baidu (BIDU, Financial), as discussed during the second quarter webcast, has lost market share in the Chinese online advertising market, with particular weakness seen in key verticals including healthcare and online gaming. Lower than expected revenue, combined with increased investments in ventures that are expected to produce profits only over the long term, has resulted in a demonstrable decline in profitability and led to a severe sell-off of the shares, resulting in what we believe to be is a very inexpensive valuation applied to its core search business.
From Steven Romick (Trades, Portfolio)'s FPA Crescent Fund 3rd-quarter 2019 commentary.
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