Investing requires a bit of perseverance, and for value investors, opportunities are more abundant during bear markets.There was a legendary F1 driver named Ayrton Senna, who once said that you can't overtake 15 times when the weather is good; it's only possible during rainy conditions because opportunities always lie within turning points.I even suspect he was using racing as a metaphor for stock trading. He must have been into stocks too.
There isn't much to do in a bear market,supported by the great belief in 'breaking even'firmly say no to any reckless or fancy maneuvers. What remains to be done each quarter is to repeatedly review your investment portfolio, check the status of each F1 car—whether there’s enough fuel, whether to change tires, and so on.
So here’s an investor’s take on Baidu's earnings report.
1. Value-oriented cash flow business
Baidu's operations are complex, but when analyzed using Occam's Razor, they can be simplified into two parts. This is not referring to the official financial report classification: core revenue + non-core (equity stakes in iQIYI, Ctrip, and Kuaishou). Instead, it’s a categorization I personally prefer:1. Value-based cash flow businesses and 2. Growth-oriented businesses that require cash flow, which in financial reports mainly reflect as marketing (advertising) revenue versus non-marketing (non-advertising, primarily including cloud and AI-related) revenue. Advertising revenue typically commands a valuation of 8-10 times earnings, representing the current cash flow foundation; but the key is whether it can hold steady. So as soon as the earnings report was released, I...