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source: Benzinga
tickers affected by this
| ticker | polarity | why? |
|---|---|---|
| BIDU | positively | Baidu’s Robotaxi initiative is expected to drive significant revenue growth and improve unit economics, with policy support and increasing fleet coverage laying the foundation for its success. The potential for a turnaround in ad revenue and accelerated growth in Baidu’s cloud business also contributes to the positive outlook for the company’s stock, BIDU. |
| GS | positively | Baidu’s Robotaxi initiative is expected to drive significant revenue growth and improve unit economics, which will positively impact Goldman Sachs’ investment in the company and its overall financial performance, leading to potential gains for the GS stock. |
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summary
Baidu’s Robotaxi Initiative Poised for Success, Analysts Say
Goldman Sachs Sees Significant Upside for Baidu’s Stock
Policy Support and RT6 Launch
At this early stage, policy support from city governments and increasing Robotaxi fleet coverage are crucial. These factors are not only driving user adoption but also laying the foundation for Baidu’s future revenue growth. While near-term revenue contributions are anticipated, the scalability of the car fleet and improvements in unit economics are key for long-term success.
Factors Influencing Robotaxi’s Profitability
- Average Price per Trip: Baidu offers an 80% discount compared to regular taxis, which is likely to phase out as the service gains popularity.
- Utilization Rate: Cars currently operate at over 60% utilization, leaving room for efficiency improvements.
- Safety Personnel: Baidu’s current setup includes one person monitoring two cars. The RT6 launch could allow for fully driverless operations in cities like Wuhan, significantly enhancing economics. Kong projects that Baidu could achieve positive unit economics by 2025, with daily operating profits per car ranging from RMB 25 to 300.
Baidu’s Recent Strides
Over the past few weeks, Baidu has made significant progress in its Robotaxi policy rollout, gaining support from major cities like Shanghai and Beijing. This support is essential as the company prepares to launch its next-generation RT6 Robotaxi by the end of 2024.
The Global Robotaxi Market Potential
The global Robotaxi market could reach $25 billion in the long term. In China alone, with its 4-5 million ride-hailing cars, even a modest 5% Robotaxi penetration could result in a RMB 35 billion (US$5 billion) market, according to Kong.
Near-Term Softness and Price Target
Despite the promising prospects of Robotaxi, Baidu faces near-term softness in advertising due to macroeconomic challenges and its AI-driven revamp of the search experience. Kong anticipates a turnaround in ad revenue by year-end and accelerated growth in Baidu’s cloud business in the second half of 2024. Goldman Sachs maintains a “Buy” rating for Baidu, with a revised 12-month price target of $144, implying a significant upside of 54.6% from the current share price of $93.15.
