cac – Scalper1

Baidu Stock Falls On Sponsored-Post Limits; Shanghai Index Down

Baidu ’s ( BIDU ) stock fell again Monday amid a broad sell-off on Shanghai’s stock exchange after China’s biggest Internet search firm announced new measures in response to a student’s death and government probe into health care advertising. U.S.-listed shares of Baidu fell 3.2% to 168.34 in morning trading on the stock market today . The stock tumbled 10.5% last week on the China probe, but had closed Friday just above its 200-day moving average. IBD’s Take: How healthy is Baidu’s stock and how does it compare to its peers? Find out at IBD Stock Checkup The Shanghai stock exchange fell 2.7% on Monday. Baidu said it would create a $150 million fund to fight Internet fraud and limit the number of sponsored posts to 30% of the search results page. The Cyberspace Administration of China (CAC) has reportedly set up a task force to probe Baidu amid mounting criticism over its prominent placement of sponsored health care services providers in its search results. Wei Zexi, a 21-year-old university student, died last month of a rare form of cancer. He had used the Chinese search engine to look for treatment for his cancer and later died after receiving care at a hospital he had found on Baidu search results. According to Nomura Securities , Baidu garners 20% to 30% of its search revenue from health care. In 2010, China’s state-run television accused Baidu of promoting counterfeit drugs through its search engine.

Baidu Falls Again; Probe To Focus On Sponsored Ads, Health Care

U.S.-listed shares of Baidu ( BIDU ) fell for the second day amid a Chinese government probe of China’s Internet search leader after the death of a university student. The Cyberspace Administration of China (CAC) has reportedly set up a task force to investigate Baidu amid mounting criticism over its prominent placement of sponsored health care services providers in its search results. “We think this incident will have some negative impact on Baidu’s share price and its search business. In view of the public outrage triggered by this incident, the task force could convict Baidu of wrongdoing at the end of its investigation and could suggest certain punishments to appease the public,” Jialong Shi, an analyst at Nomura Securities, said in a research report. “A minimal punishment would be a cash fine for violation of certain regulations or misconduct as an ad publisher,” the Nomura analyst said. “A more material impact would be a complete/partial ban on health care advertising on the Internet, including search engines. Based on our industry sources, Baidu derives 20% to 30% of its search revenue from the health care category.” Baidu stock was down more than 2% in late-afternoon trading in the stock market today , at a nearly two-month low near 175, after falling 7.9% Monday. Baidu has an IBD Composite Rating of 76 out of a possible 99. It is now in sell territory, down nearly 8% after a breaking out from a cup-with-handle base at 189.90 on March 29. The 21-year-old university student, Wei Zexi, died last month of a rare form of cancer. He had used the Chinese search engine to look for treatment for his cancer and later died after receiving care at a hospital he had found on Baidu search results. “A more profound negative impact would question Baidu’s brand as a trustworthy and reliable search engine,” said the Nomura analyst. “The overwhelming negative press coverage over this incident could once again shake Internet users’ trust in Baidu’s search results.” In 2010, China’s state-run television accused Baidu of promoting counterfeit drugs through its search engine.