We switched our tune earlier this year on our bearish sentiment on Baidu (BIDU). Since that time, Baidu (BIDU) has broken above $100 and now sits above $110 right before a critical earnings report due after the bell.
Last time we cited it's recent acquisition of IPTV as a possible catalyst for a move higher. Then last week it was the announcement of another acquisition that spiked shares.
With Baidu (BIDU) shares under pressure over the past 2 years on competition concerns and it's ability to generate revenue and profit in a changing environment, we feel these acquisitions shows Baidu (BIDU) is focused on evolving and adapting, which is key for a tech company.
We are currently bullish into earnings and hold $125 and $130 calls and will add more to our position throughout the week.
Obviously holding positions into earnings can be a very risky venture, but we feel the reward at these levels, exceed any risk and expect Baidu (BIDU) to test $115.66 in short order.
