Baidu Stock (BIDU) Up Amidst Reports of a Data Breach

Shares of the Chinese Internet search provider Baidu Inc. (BIDU) have been up on the day as a result of their better than expected fiscal 2015 fourth quarter earnings report. The Google doppelganger reported total revenue of $2.887 billion – a 33.1% year over year increase – that surpassed the Zacks Consensus Estimate of $2.731 billion.

Baidu’s outlook was promising as well. Baidu anticipates total revenue for Q1 of 2016 to range between $2.379 billion and $2.465 billion. The projected revenue will likely register a year-over-year expansion of 21.1−25.5%, which is within the Zacks Consensus Estimate of $2.429 billion.

According to Fortune, Baidu is investing greatly in developing new services to adapt to the Chinese population’s admiration of smartphones and technology leaps in artificial intelligence. 

“The clock is ticking, however, for Baidu, similar in many ways to Google with search as its bread and butter, to turn its new tech investments into meaningful business. Spending on businesses like delivery, online deals and video services pulled operating margins down 30.8 percentage points,” said Fortune.

Despite the article’s skepticism, shares of BIDU were up $15.70, or 9.92% as of 12:50 PM ET.

 

 

The Data Breach

It appears that not even reports of Baidu customer’s personal data being collected and insecurely transmitted can deter its stock from surging. Per a BBC report, security experts at the University of Toronto’s Citizen Lab stated that millions of Chinese citizens are believed to have been affected by these data leaks via thousands of apps using code from Baidu.

“The transmission of personal data without properly implemented encryption can expose a user's data to surveillance,” said the Citizen Lab in a report. It continued, “The leakage of such user data is particularly problematic for individuals who use these applications and their devices to engage in politically sensitive communications.”

Ron Deibert, director of the Citizen Lab, also provided a quick comment, stating, "It's either shoddy design or it's surveillance by design.”

The data taken via Baidu code reveals where people are, what people searched, which were visited, and the ID numbers of users that own computing devices. Furthermore, the code is found in a software development kit that can be used to create apps for Android phones and programs for computers with a Windows operating system.

The Citizen Lab’s report also notes that apps and browsers made using the Baidu kit have been downloaded hundreds of millions of times. As part of a long-running research project, the Lab has focused on privacy and personal data use in China.

Citizen Lab said that Baidu had fixed some of its code’s issues since the company was first notified about them in November last year. However, the Lab also noted that the poor encryption scheme was still being used on sensitive data.

Despite this troubling news, Baidu stock prices have been trending upwards the entire day.

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