Baidu‘s (NASDAQ:BIDU) stock recently dipped after the Chinese tech giant posted its fourth-quarter earnings. Its revenue rose 5% year over year to 30.26 billion yuan ($4.64 billion), marking its second straight quarter of sales growth but narrowly missing estimates by $20 million. Its adjusted net income fell 25% to 6.87 billion yuan ($1.05 billion), or $3.08 per share, but beat expectations by $0.49 a share. Baidu expects its revenue to rise 15%-26% year over year in the first quarter.
Those headline numbers look stable, but is Baidu’s stock still worth buying after more than doubling over the past 12 months?
Baidu still hasn’t fixed its biggest problem
Baidu generated 68% of its revenue from its online marketing services in the fourth quarter, compared to 72% a year ago. This core business mainly sells ads on its search engine, portal sites, and other apps.
Its revenue dipped 0.3% year over year to 20.71 billion yuan ($3.17 billion) during the quarter, marking its seventh straight quarter of declining sales. On the bright side, its revenue rose 2.5% sequentially.
Unfortunately, the growth of Baidu’s advertising business is dismal compared to that of many of its Chinese peers. In their latest quarters, Tencent‘s (OTC:TCEHY) online advertising revenue rose 16% year over year, as Bilibili‘s (NASDAQ:BILI) advertising revenue soared 126%.
Baidu attributes its sluggish ad