According to the Wall Street Journal (WSJ), Jidu Auto, a joint venture between Baidu and Geely, plans to spend $7.7 billion in developing autonomous car technologies. The company is expected to hire 2,500 to 3,000 staff, including 500 software engineers, over the next three years.
Baidu (BIDU) owns 55% of Jidu Auto, while Geely owns 45% of the joint venture. The first vehicle from Jidu will be an EV and is expected to be rolled-out in the next three years. The vehicle will also be designed to resemble a robot to target the younger generation, revelead CEO Xia Yiping in an interview with Reuters. Jidu Auto plans to launch new models every 1.5 years.
According to the WSJ, Baidu has been investing in autonomous car technology for years and the announcement about collaborating with Geely in January 2021 caused its shares rise . Geely recently unveiled its plans for a new brand to compete in the EV segment called Zeekr. (See Baidu stock analysis on TipRanks)
China Renaissance analyst Ella Ji recently reiterated a Buy rating on Baidu stock but lowered the price target to $300 from $325. She estimates that core advertising revenue will increase during 1Q owing to strengthening mobile traffic and improving revenue contributions from cloud contracts. Ji acknowledged that revenue from the autonomous car unit remains low but is expected to gain traction throughout the year.
Consensus among analysts is a Strong Buy based on 15 Buy and 2 Hold ratings. The average analyst price target of $351.60 implies 59.14% upside potential.
BIDU stock scores a “Perfect 10” on TipRanks’ Smart Score tool. This suggests that it is likely to beat market expectations.
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