I mentioned the increased competitive threat in search from Qihoo 360 (QIHU) and the shift to mobile as the two key drivers that led to the decline in Baidu over the last three months.
Overnight, I received further comments from contacts in China regarding the big move in Baidu in recent days.
There are rumors that Baidu's CEO, Robin Li, has left his wife or is about to leave her. People are worried about what the dissolution of their marriage might do to the ownership of Baidu and how this might negatively affect the stock, presumably because some believe the wife would flood the market with her shares to get liquidity.
This isn't unprecedented in China. Just a year and a half ago, the Chinese online video company Tudou (TUDO) had to delay its IPO because of an ongoing divorce. Tudou had originally filed for its IPO before its rival Youku (YOKU). At the time of filing, Tudou was the leader in the space. After months passed and Youku had a blockbuster IPO, Tudou saw its market share slip. Eventually, Youku and Tudou merged.
There was also supposed to be a Baidu investor lunch in China in the last week. Apparently, this lunch was canceled, leaving investors to wonder why.
Finally, some believe that the swift move down is also related to this week's option expiration.
Are any of these reasons fair? No. But the market doesn't care and is selling on the rumors.
This latest drop is only a day and a half old. There's a chance we could see several more days of selling before it settles down. So be careful before stepping in to buy this name on value.
Depending on the size of this drop, though, the name could become an interesting long trade in a few sessions from now.
I will keep you posted if I hear any other news out of China.