Internet Earnings Wrap: Trip.com Flies Back to Profits, While Baidu Continues to Stagnate

Internet giants Trip.com and Meituan, which suffered setbacks during the height of China’s Covid-19 outbreak, posted third-quarter comebacks as life in the country largely returned to normal. At the same time, up-and-comers Pinduoduo and Bilibili continued to nibble at the heels of more established rivals, even as they remained squarely in the loss column despite strong revenue gains.

At the other end of the spectrum, search giant Baidu was the quarter’s big loser, as it continued to struggle with stagnant sales in the face of growing competition and lack of significant contributions from its heavy investment in artificial intelligence (AI) initiatives.

China’s internet sector has undergone a major shakeup over the last five years, with a second generation of names like online-to-offline services specialist Meituan, online video provider Bilibili and e-commerce up-and-comer Pinduoduo rising quickly to challenge the likes of stalwarts like Alibaba, Tencent and Baidu.

Two of those newer names, Pinduoduo and Bilibili, were among the fastest growers in the third quarter, both posting revenue growth of about 70% as they aggressively added new users. But the heavy spending also took a toll on their bottom lines, though Pinduoduo was able to significantly reduce its loss year-on-year even as Bilibili moved sharply in the other direction.

The pair’s stocks have been among this year’s best performers, with Pinduoduo more than tripling while Bilibili’s shares have nearly tripled from where they started 2020.

Meantime, the quarter provided a bit of relief for leading online travel agent Trip.com, which returned to the profit column as demand for its products and services rebounded with the taming of China’s Covid-19 outbreak.

Meituan also continued to show clear signs of recovery, after demand for many of its services like movie tickets and shared bike rides took a hit in the first half of the year at the outbreak’s height. The company posted nearly 30% revenue growth for the third quarter, up sharply from 9% growth in the second and a 12.6% decline in the first when China was shut down for much of the period.

As it slowly recovers, Trip.com’s shares have gained nearly 20% over the past six months, while Meituan’s have risen an even stronger 78% over the same period.

On the flip side, Baidu — once China’s clear No. 3 internet company by market value — continued its recent stay in the doldrums by posting a third consecutive quarter of nearly flat revenue. Its top line returned to growth by posting a slight 1% revenue gain, after the figure fell by 7% and 1% in the first and second quarters, respectively.

Baidu’s shares were down sharply in the first part of the year at the height of China’s outbreak, but have clawed their way back since then and are now up about 5% year-to-date.

Contact reporter Yang Ge (geyang@caixin.com)

Download our app to receive breaking news alerts and read the news on the go.