Baidu Inc (NASDAQ:BIDU) reached a new 52-week low on Wednesday, less than two weeks away from when the company is set to report its latest quarterly results. The stock is into oversold territory with a Relative Strength Index of less than 22.
However, this unfortunately is not new territory for Baidu as the stock has been struggling over the past year, losing more than half of its value during that time.
Thing went from bad to worse in May when the company last reported its quarterly results. It was the first time Baidu posted a loss in 15 years. Often seen as China’s version of Google, Baidu has not been able to generate the same excitement and a poor result sent the stock reeling.
However, as bad as things look for Baidu, it might be a good opportunity for investors to buy the stock at around the $100 mark. The last time Baidu was trading this low was back in 2013. Except back then, the stock was headed on its way up, not down.
For investors, buying the stock ahead of its upcoming earnings release could be a calculated risk. With the stock trading so lowly, there may not be a lot more risk that the stock will continue to drop much further down. The stock has achieved a lot in six years and grown significantly, and so it’s hard to imagine it being less valuable of a company today than it was back in 2013.
Unless Baidu has an even worse quarter than it did three months ago, it’s hard to see a scenario where there isn’t at least some sort of recovery in the stock price. And if the company has a solid earnings beat, it could be the start of a much bigger rally.
