Baidu (BIDU) – Wall Street Darling No More

Today officially marks the end of Baidu (BIDU) as the once loved wall-street darling that rose 1000%+ from the 2008 collapse... at least in my book. It used to be a stock every hedge fund owned and every analyst had buy ratings with lofty price targets. Today Credit Suisse downgraded the stock and reduced it's price target from $118 to $83, which is the lowest price target on the stock right now. I think that will change as analysts will continue the trend of downgrading the stock on competition and market share concerns.

Folks bearish on the stock have been raising their bets on future downside, as 8,494,038 shares are currently short and is an increase of over 1 million shares from the month before. I expect that to increase 3-4 fold in the coming weeks.

We are betting on a quick move under $100 for Baidu(BIDU) this week, as the selling pressure increases and shorters continue to increase their bets. We currently hold the 100/95 weekly puts and the October 20th puts. Baidu(BIDU) can be a very volatile stock, so be prepared for some wild swings here but to me it looks like the 3 week battle of bull vs bear has been decided with a decisive victory coming from the Bears here shortly.

Baidu is trading at $106.32 as we write this.

 

Profile photo of jimmybobJimmyBob (Scott)has been trading equities for over 15 years, a majority of which were OTC micro-cap stocks. He started trading high risk stock options over the past 7 years, and has proven winning trades in excess of 15,000%.

As one of the Co-Founders of optionmillionaires.com, Scott enjoys sharing his knowledge with other investors through timely blog posts, daily watch lists in the forum, weekly webinars, and helpful advice within the chatroom.

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