The US streaming companies like Netflix (NFLX), Disney (DIS), and Amazon (AMZN) have struggled lately as investors are questioning if the streaming business model is financially sustainable. Companies are battling with subscriber growth saturation and figuring out how much subscribers are willing to pay. To keep up with content wars, streaming providers are competing to create content to keep people engaged.
If you ask people, most people tend to pay for 3 to 4 streaming services in order to get all the channels and shows they want to watch. Many of the cord-cutters canceled pay-TV because of the cost, but now are facing rising costs. If only there was a service that had all the channels in one place for one cost… Wait, that was cable.
However, the US isn’t the only country in the streaming game and there’s one company that posted its first quarterly net income since its 2018 listing, after carrying out aggressive cost control measures.
This information services company is involved in everything from streaming to cloud computing and autonomous driving. The stock has been on the rise over the six months even though the rest of the US market has been in a free-fall.
Baidu, Inc (BIDU) offers internet search services in China, and similar to Alphabet’s (GOOGL) search engine dominance in the US, BIDU currently has an 84% market share of the Chinese search engine market. BIDU also operates the iQIYI streaming service as well as Haokan, a short video app. For simplicity’s sake, they are very similar to Alphabet in terms of just how many different segments they are involved in.
As their search engine and online advertising revenue came under pressure from competitors, BIDU committed to pivoting away from its core online marketing business to reinvent itself as a supplier of deep tech, by expanding into self-driving systems, cloud computing, and semiconductor chips.
BIDU is looking to launch a fully driverless ride-hailing platform in China by 2023 after receiving a testing license from regulators in April. They plan to expand the service to 100 cities by 2030.
Despite the lockdowns in China, BIDU has managed to increase sales year-over-year (ok, I’m giving them a pass for 2020).
We’ve also been looking at low beta stocks for the last six months and BIDU fits with a beta of 0.80.
With recent bank upgrades and revised price targets in the $200 range, I’d like to see the stock break through the $155 level before looking for it to go further.
Here’s a potential trade idea using call options.
Bull Call Spread
Buy to Open -> 2022 Aug 19 $160.00 Call
Sell to Open -> 2022 Aug 19 $170.00 Call
Debit to place a trade: $358 per spread
Short-Term Target of Underlying: $165
P/L of Spreat at Price Target: $107.16
Risk Graph (CP = Current Price):
The stock needs to be higher than $163 at the time of expiration for the spread to expire with value, however, if the underlying keeps going up in a short period of time, the option spread will gain value, even if it continues to be out of the money.
You can move the strikes to be further in the money if you’re worried about trading out-of-the-money spreads, but the further you go in the money, the more the upfront debit will be.
If you have any questions, comments, or anything we can help with, reach us at any time.
Email: [email protected]
Phone: (866) 257-3008
Guest Writer, Filthy Rich, Dirt Poor
Editor, Wealthy Investor Society
February 7th, 2023Is The Stock Market Cycle Pointing To A New Bull Market Already?Are we in another bear market rally or the start of something new? That’s what everyone wants to know, especially as we
February 6th, 2023Job Creation Shocks The MarketIf we’re heading into a recession, how were we met with better-than-expected job growth numbers last week? Unemployment dropped, despite the headlines of tech companies planning to lay off
February 3rd, 2023Job Cuts And Stock Buybacks Keys To Success In 2023 The thing I’ve learned from this earnings season is that a company can have consecutive quarterly drops in revenue and provide a lower
February 2nd, 2023Fed Raises Rates But Bulls Are Still In ControlOk, bulls. You win. I will start lifting my bearish stance on the market. Despite the final 10-minute market sell-off and a Dow that finished
February 1st, 2023What Past Fed Announcements Tell Us The Market Will Do TodayWatch out - this article is going to have some math.Here we are once again on Fed Announcement day. Most of the folks
January 31st, 2022The Hidden Profits Of 2023There is still one more trading day left in January, but if the adage “as the S&P 500 goes in January, so goes the year” holds true, the markets
January 30th, 2022 The Fed Goes Up Against Earnings This Week We are in peak earnings season with some heavy hitters like Pfizer (PFE), Snap (SNAP), Meta Platforms (META), Amazon (AMZN), Alphabet (GOOGL), and Apple
January 17th, 2022Smoother Sailing in 2023 Nothing has changed since the end of 2022, yet traders have already decided that this year won’t be as bad as the last. Bulls have been piling into stocks
January 12, 2023 The Rise Of Bing Over Google - That’s No Joke Before we talk about two tech giants getting ready to battle it out once again, let’s look at the overall market. The
January 9th, 2022 Why I Ignore Most Of The News It’s easy to get caught up in the financial headlines. I’ve certainly done it. Last week shows why I ignore most day-to-day stories. I know
267 Kentlands Blvd #225
Gaithersburg, MD 20878
P. (866) 257-3008
(Monday-Friday 9:00 AM-5:00 PM EST)
Publisher of actionable and proven strategies and tactics to help investors build wealth and reach seven-figure portfolios.
Get notified about new articles, special events, training, and much more
Leave your info below to get more options and trading ideas to your inbox
Yes, send me news to my inbox.