On Wednesday, Bilibili Inc. (HKG:09626) shares plummeted more than 9% after announcing its most recent quarterly results. On the other hand, its Chinese internet counterpart Baidu Inc. (HKG:09888) fell by more than 6% after releasing its FQ3 results.
Both companies beat analyst expectations on earnings, with Bilibili also beating revenue estimates while Baidu’s top line was in line with expectations. With both stocks experiencing pressure from the Chinese government crackdown on technology companies, which is the better buy?
Bilibili posted FQ3 non-GAAP earnings per share of -$0.65, beating the consensus for Street expectations of -$0.67. However, its GAAP EPS of -$1.07 missed the average analyst estimate of -$0.80, while revenue increased by 61% from the same quarter in 2020 to $808 million, exceeding estimates by $2.91 million.
The stock trades at a steep P/S ratio of 13.94, making it less attractive to value investors. In addition, analysts expect its bottom line to decline by more than 118% this year before bouncing slightly by 5.40% next year.
Therefore, growth investors could also stay away from Bilibili shares.
Source – TradingView
Technically, the stock seems to be trading within an ascending channel formation in the intraday chart. It recently surged closer to overbought conditions before Wednesday’s pullback.
Therefore, investors could target extended declines at about 472.74, or lower at $61.67, while $88.43 and $99.25 are crucial resistance zones.
Baidu’s recent quarterly results beat the non-GAAP EPS estimate of RMB14.66 by RMB1.71, while revenue for the quarter grew by 13.1% from last year to RMB31.92 billion, in line with Street estimates.
The stock trades at attractive trailing 12-month and forward P/E ratios of 8.09 and 2.44, respectively making it an exciting option for value investors.
Moreover, analysts predict its earnings per share to improve by more than 860% this year before rising at an average annual rate of 12.68% over the next five years. Therefore, it could also gain the attention of growth investors.
Source – TradingView
Technically, Baidu shares seem to be trading within an ascending channel formation in the intraday chart. However, the stock has recently pulled back to find the trendline support, creating a perfect opportunity for a rebound.
Therefore, investors could target upward profits at about $173.09, or higher at $185.24, while $148.55 and $136.05 are support levels.
Baidu is the better buy
In summary, given Baidu’s exciting growth prospects and compelling valuation multiples, it seems like the better buy compared to Bilibili.
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