Baidu's revenue is coming. Here is what to expect.

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Chinese giant's actions in online research
Baidu

have lost nearly 40% of their value since the beginning of the year, the weakening of the Chinese economy having slowed corporate advertising spending and weighed on Baidu's revenues.

Baidu (symbol: BIDU) is expected to release its second quarter results on Monday after the market closes. Here are some things to know before the results report:

• Baidu is under pressure this year and recorded its first net loss last quarter since its IPO in 2005. Many companies have reduced their marketing budgets due to the weaker growth of the world's second-largest economy. This also hurt Baidu's online advertising revenues.
• Annual quarterly revenue growth has increased from over 30% in the second quarter of 2018 to only 9% in the first quarter of this year. If we look only at the main activity of online advertising – the only segment that earns money – revenue growth was virtually nil for the March quarter. The recently intensified trade war between the United States and China could further damage the business climate. The stock has fallen 39% so far at Friday's close.
• For the quarter ended in June, Wall Street expects Baidu to experience a first decline in its sales from one year to the next since the fourth quarter of 2016. Consensus sales forecasts of analysts surveyed by FactSet stood at 25.8 billion yuan (3.7 billion US dollars). , about 5% less than the same period last year. Analysts estimate the company will offset the loss in March with net profit of about 1.3 billion yuan ($ 0.2 billion). Nevertheless, they do not expect US earnings per share to be 6.18 yuan, or 88 cents US, or less than a third of the previous year.
• Baidu is investing heavily in new business areas in the hope of triggering its next phase of growth. Baidu is the developer of DuerOS, an Alexa-based operating system that supports natural language processing and voice queries. Sales of smart speakers now account for a 16% market share worldwide, just behind the 17%
  Alphabet

  Google (GOOG) and 27% of
  Amazon.com

  (AMZN), according to the market analysis firm Canalys. The company is also developing an open source platform to enable business partners to easily develop artificial intelligence applications, including in areas such as speech recognition, computer vision, and large data processing. Baidu also recently released Apollo 5.0, an updated version of its driverless software solution. Nevertheless, not all of these initiatives may contribute much to Baidu's revenue stream and investors will continue to see declining earnings in the near term.

• Baidu's shares are now trading at a discounted value of 18x earnings, which is well below the five-year average and peers of China's Internet sector. Most analysts maintain buy or hold stock ratings, with an average price target of $ 140 per US Depository Share over the next 12 months. It is about 45% above current levels.

Baidu management will hold a conference call to discuss financial results on Monday at 9:15 pm AND.