Baidu's market cap swells past $50 billion on Facebook news
12 Apr 2011
Baidu's stock shot up to new highs on news of its joint venture plans with social networking giant Facebook, with its market cap rising past the $50 billion-mark.
Shares of Baidu were trading up 3.2 per cent at $146.35 on Monday while trading volume rose to approximately 7.4 million shares against the average 30-day volume of 6.4 million shares.
The Baidu stock had fallen to as low as $59.68 over the past 52 weeks, with the shares hitting a high of $143.48.
The deal, however, is still away as the joint venture has to be approved by the Chinese government. It is also not known what stance the government would take after the Google row and the generally highly competitive social networking market in the country.
The Chinese market is saturated with a whole lot of social networking sites such as the Tencent as also Facebook clone RenRen and Twitter clone Weibo.
The new jointly-owned networking site would be based in China as Facebook is barred from operating on its own in that country. It is also not clear when the site would be launched. (See: Baidu-Facebook Chinese web site in the offing: Report)
While Facebook CEO Mark Zuckerberg had, last year, taken the initiative and travelled to China to meet with Baidu CEO Robin Li. joint ventures in China need to be approved by the government.
The deal, however, makes sense for both Facebook and Baidu as it would expand the market for both. Facebook will get a big local partner to break into the huge Chinese market while Baidu can ward off further threat from local social networking juggernaut Tencent.
