Baidu will feel a financial pinch following medical forum scandal, warns analyst
Summit Research analyst Henry Guo has lowered his price target on Baidu, citing the recent scandal which saw Baidu criticised by NGOs for selling access to medical forums on Tieba to private businesses.
Guo also cited increased competition for ad spend from the likes of Tencent as also having a major impact in his decision to lower his expectations.
"Competing advertising platforms have gained market share from Baidu, including Tencent Holdings' GDT, Toutiao.com and other search engines like Qihoo 360 Technology and Sohu-owned Sogou," said Guo.
He said he expected a 31 per cent year-over-year growth for Baidu, with its core search business growing by 27-28 per cent. Growth will be bolstered by iQiyi, the businesses online video site, according to Summit Research’s estimates.
In terms of the medical forum scandal, a report from Investor's Business Daily cites Guo to have said, "that over 40 per cent of Baidu's Post Bar forums had been sold to commercial organizations and personnel, including unlicensed hospitals and quack doctors. An article from Beijing Youth Daily (not verified by Baidu) indicates that an illness related forum could be sold for at least RMB200,000 (£21,440) a year."
Baidu has issued an apology and said it was already in discussions with 23 of the 36 NGOs to make sure better health information reached users.