Bull vs. Bear: Chinese language Inventory Showdown

On this podcast, Motley Idiot analyst Emily Flippen and contributors Jason Corridor and Toby Bordelon:

• Go head-to-head on PDD Holdings.
• Debate whether or not Baidu can self-drive its future.
• Do a velocity spherical between Weibo and iQiYi: deep worth or worth traps?

To catch full episodes of all The Motley Idiot’s free podcasts, take a look at our podcast heart. Whenever you’re prepared to take a position, take a look at this high 10 record of shares to purchase.

A full transcript is beneath.

This podcast was recorded on Nov.18, 2025.

Emily Flippen: We’re flipping the script right this moment on Motley Idiot Cash as we put our bullhorns on and sharpen our bear claws to dig into Chinese language inventory earnings. It is Tuesday, November 18th. Welcome to Motley Idiot Cash. I am your typical host, Emily Flippen. However right this moment we’re placing Idiot contributor Jason Corridor within the huge chair so that you just, Jason, might help facilitate a enjoyable debate right this moment between myself and Idiot analyst Toby Bordelon.

Jason Corridor: Emily, I am by no means brief on opinions. We all know that, however on Motley Idiot Cash is a good suggestion to align these opinions with experience. This morning now we have earnings from 4 of the biggest Chinese language firms, and I do know that you just lived in China for 4 years. You may have loads of bullish ideas that may be backed up with precise data and experience. We thought it could be enjoyable to match you up with our infamous Chinese language inventory skeptic Toby Bordelon to have a little bit of a quick paced bull-bear debate. We’ll get to iQiyi, Weibo, and Baidu later. However first, let’s begin with a inventory that you just truly personal in your portfolio. That is PDD Holdings. Ticker image is PDD, previously often known as Pinduoduo. It is an e-commerce powerhouse. Sears down right this moment after what appeared like a fairly strong quarter. Emily, is that this a shopping for alternative?

Emily Flippen: I truly do suppose it is shopping for alternative, Jason. Now, to your level, I do personal this in my private portfolio, so I am arguably somewhat biased right here, however this was a strong quarter. Income development wasn’t something to put in writing residence about, nevertheless it was according to what the corporate was anticipating, given the truth that they’re working in a extra aggressive and admittedly tariff-ridden atmosphere. However the motive I like this firm is due to its enterprise mannequin. Nearly every thing flows by to the underside line with this enterprise. PDD on each the Pinduoduo market in China in addition to its Temu market that serves a worldwide viewers would not usually personal the stock that it lists. It is simply the fee infrastructure and logistics platform, and on its Chinese language aspect, a majority of the income comes from advert placements. PDD Holdings was capable of develop income at practically twice the speed of income within the quarter, even with all the craziness happening with problems with dropshipping and the removing of de minimis in the US, it has practically 25% web earnings margins over the previous yr. I am so compelled by this chance.

Jason Corridor: Emily, I really feel your power right here. However, Toby, I’ve a sense it’s possible you’ll be somewhat bit much less glass half full than Emily is.

Toby Bordelon: Yeah, look, I acquired to be trustworthy right here. I am undecided I’d name 9% development strong for an organization like this. It is an e-commerce platform in a theoretically quick rising Chinese language shopper financial system, 9% ain’t going to chop it as a result of it is not assembly investor expectations right here. If they can not get the expansion charges up, I believe the valuation multiples they are going to come down quick. My different drawback right here is the heavy spending they’re doing. Administration even went as far as to warn that income are going to fluctuate as a consequence of issues like greater advertising and marketing prices, service provider subsidies, funding within the platform. It is trying like lots of what they anticipate this development to be goes to be much more costly going ahead, and it indicators the platform is probably not very sticky for shoppers.

Emily Flippen: My gosh, Toby, you suppose the valuation multiples are going to come back down? This enterprise has a market cap of someplace like $180 billion. Practically $60 billion of that’s in money. It has an enterprise worth to EBITDA of lower than 10 occasions whereas rising its backside line earnings per share double digits. Even when the highest line is barely rising 9%, that is downright low cost. That is too low cost to disregard.

Toby Bordelon: Now, look, it is solely low cost with the idea that you’ll get a rebound on these development charges. If we’re in a everlasting development decline, the market goes to reset to a decrease valuation sooner or later. From a platform and enterprise funding standpoint, this could possibly be a cash pit, not a development alternative. The larger image, Emily, I believe, is we do not know what’s driving these outcomes. What is the Temu contribution versus PDD? Who is aware of? What is the platform gross market worth? No thought. Gross market quantity? No thought there. What is the retention charge, the take charge? There is no disclosure with these items. Chinese language firms, let’s put it this manner, they traditionally do not need the very best popularity by way of maintaining all of the numbers on the up and up. A refusal to share particulars on these items, would not give me lots of confidence in what’s actually happening right here.

Emily Flippen: Yeah, I believe that is honest. I by no means get the total colour that I would like from Chinese language firms and may really feel somewhat felony about the truth that they do not even give reportable segments when it comes right down to what gross sales come from Temu versus the Pinduoduo market. We disagree however nonetheless, I believe the valuation is appreciable for possibly extra danger tolerant buyers.

Jason Corridor: Mates, that is what makes a market proper right here. Love the Silly disagreement. Up subsequent, we’re determining if Baidu’s autonomous automobile enterprise might help drive it, self drive it to a profitable future. Keep on with us.

Welcome again to Motley Idiot Cash. Chinese language shares could be a non-starter for a lot of buyers, particularly in the event you’re speaking about Chinese language small caps. However Baidu, ticker BIDU, is considered one of only a few exceptions for people who nonetheless need to put money into China, however with much less danger. It has been described because the Alphabet of China. Baidu has made a reputation for itself in search, promoting, and its “different choices” like self driving, however much like its American counterparts, Baidu has been beneath hearth for fears that AI may upend its search and associated promoting companies. Toby, did Baidu’s newest outcomes give any clues about the way it’s navigating these considerations?

Toby Bordelon: They didn’t, Jason, at the least not in my view. I reinforce the idea that Baidu is not doing it very nicely. Income is falling somewhat bit. That is problematic for a supposedly dominant platform of their market. Baidu has not completed an excellent job of diversifying its income sources. It is actually very ad-dependent nonetheless, and that core advert enterprise is shrinking. That is in distinction. A few of the US tech giants who’ve had related points proper when AI first burst on the scene, however their advert income is rising, for probably the most half. Cloud AI income for Baidu just isn’t but giant sufficient to offset the decline they’re seeing and that is an issue worsening. General margins are beneath severe stress as a result of the elements of the enterprise which might be rising, that they are investing in, are decrease margin, that means they acquired to develop quicker offset the underside line affect. Toss on considerations in regards to the total macro financial system in China, and Baidu is simply not that compelling to me. Now, you would possibly say, “Look, hey, the thesis right here is AI development.” I get that possibly. However administration is telling us do not anticipate severe returns there anytime quickly. We have a declining core enterprise, a low margin development enterprise, and an unsure way forward for what AI may, if it does change into a significant development driver right here. What it could possibly be, and the way worthwhile it may be at scale. For me, the upside right here is simply not justifying the chance I see.

Emily Flippen: Toby’s proper.

Jason Corridor: Okay guys, thanks for listening to Motley Idiot. We’ll see you tomorrow.

Toby Bordelon: Sadly, you may’t fly with the headline numbers right here, which is Toby is true. The advert market in China proper now it is unhealthy throughout the board. Baidu particularly, it is dominance in search, particularly, it is having the alphabet drawback, it is nonetheless there, however they’re shedding floor, they’re shedding market share and income is falling, and its core enterprise is advert placements, and that is simply been extremely weak for this firm. However I do suppose we’re beginning to see some return on funding for these initiatives. Whereas that hasn’t made up for that core enterprise falling, I believe we’re beginning to see what the size could possibly be if Baidu does finally get there. Along with their search enterprise, in fact, they’re additionally a number one Cloud infrastructure supplier in China, so you may suppose somewhat bit like AWS right here in the US, and their subscription-based AI options grew 128% yr of yr. Now, these are options that have been and are actually costly for Baidu to construct out initially, however plainly scale is beginning to come. It is potential that lots of the bills, lots of the prices that we noticed Baidu expertise during the last couple of years are going to be largely behind us now as Baidu seems to be to be a barely extra worthwhile future. Whereas administration hasn’t essentially guided for that but, I do suppose that they’ll finally transfer in that course.

Jason Corridor: The counter you are saying is that what we’re seeing is decrease margins in that development enterprise ought to begin to enhance as scale ramps up?

Emily Flippen: It is potential. I hesitate solely as a result of we have not heard administration come out and outright say that. Whereas, I believe if we noticed that going to occur over the course of, say, 2026, administration could be very clear by way of the steerage that they anticipate to come back in. To Toby’s level, lots of the commentary we’re getting from administration, are simply round their AI initiative. All of those different totally different pies that Baidu’s fingers are caught in proper now. We do not see the precise tangible outcomes popping out from these initiatives but, however I believe it is totally potential that over the course of say the following 5 years, over the course of the following 10 years, that every one it takes is considered one of these pies to bake notably nicely to greater than make up for the core search enterprise, even at that core search enterprise does proceed to say no. I truly suppose that the world that this could possibly be that does not get practically sufficient investor consideration is self-driving options. We discuss Tesla and others. They get all of the headlines about robotaxis, however, my gosh, Baidu has self-driving robotaxis already in operation in 22 cities internationally. In lots of areas, that is 100% totally driverless, precise business providers being utilized by the Chinese language public every day. This isn’t in a managed atmosphere, this isn’t one thing that’s in any other case being closely scrutinized or regulated. That is simply part of on a regular basis life. I believe the truth that Baidu within the alternative that being a frontrunner in robotaxis has, provides lots of residence nation bias as a result of American buyers simply do not see that the way in which we see it with Waymo or Tesla.

Toby Bordelon: My huge concern right here, you are proper. There may be potential, however huge image, if it’s a must to be much more optimistic than administration is being to make an inexpensive wool case, I really feel like that is an indication there are in all probability higher alternatives elsewhere in your funding in capital.

Emily Flippen: What can I say, Toby? I am an optimist at coronary heart.

Jason Corridor: Bought to adore it. Alright thanks, you guys. Developing subsequent, we’re fast firing on two smaller Chinese language shares, nonetheless looking for their place on the planet. After fairly a very long time for at the least considered one of them, we have Weibo and iQiyi subsequent proper after this fast break.

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Toby Bordelon: Riot can unfold like a plague.

Emily Flippen: No matter you are into, it is proper right here. Prime Video. Subscriptions required. Content material might embody advertisements, 18 plus Ts and Cs provide.

Jason Corridor: Return to Motley Idiot Cash. As we wrap up right this moment’s present, let’s focus on two lesser recognized Chinese language shares, Weibo and iQiyi. Weibo, Ticker WB is a little bit of a washed up Chinese language weblog web site. That is an excellent bull pitch proper there. It is mostly within the US in comparison with Twitter or X, and iQiyi is a video streaming platform with a enterprise mannequin that is much like Netflix. It is struggled to retain development, not very very similar to Netflix. Now, each companies are in comparison with failures when stacked up subsequent to Baidu and PDD Holdings. Toby, whenever you have a look at both of those two firms, does one stand out as redeemable to you or do you suppose each are uninvestable?

Toby Bordelon: Truthfully, Jason, I avoid each of them. As soon as upon a time, I truly had a really small funding in iQiyi, however I gave up on that when it was clear that this was going nowhere. Look, Baidu already owns 45% of that enterprise, so in the event you actually need to put money into it, you can simply do it that manner. Because it seems, it has been horrible for Baidu, too. It has been dragging them down at a time the place they actually do not want every other drags on their enterprise, as we have already mentioned right here. IQiyi is shedding cash on an working foundation. I’ve acquired no expectation that adjustments anytime quickly, actually.

Jason Corridor: All proper, Emily. I’ve acquired a aspect with Toby somewhat bit right here. He hinted at it, however there’s some math that screams warning at me about iQiyi. I spent more cash paying curiosity final yr than it earned in working earnings. That is robust to dig your manner out of that. What is the bull case that it will possibly see its manner ahead in a manner the place buyers truly earn cash?

Emily Flippen: I hesitate once more to say that. Sure, you are proper. Once more, these are proper at face worth, and I definitely have my work lower out to me to make a bull case for both of those companies, however I like to play satan’s advocate, and to your level, Jason, two sides do make a market. They’re lots much less clear lower than Baidu or PDD, however I attempt to see the forest by the timber. Within the case of iQiyi, the monetary danger of the debt and the dearth of income are mainly nonexistent for precisely the explanation Toby talked about. They’re totally backed by the money producing big that’s Baidu. Baidu will not, in my view, actually let this firm fail. IQiyi does have some actually precious properties. In contrast to different apps, there is not a transparent competitor to iQiyi and Chinese language streaming, so I may draw comparisons between them and Netflix prior to now, getting up to the mark and authentic content material and scale in a rustic with billions of individuals. It is onerous, it is costly. Possibly they simply want extra time right here. I believe the chance of chapter given their monetary profile remains to be low with such good backing.

Jason Corridor: Let’s transfer on to Weibo. Toby, primarily based in your feedback, I assume you suppose buyers ought to pause right here and transfer on too, proper?

Toby Bordelon: Yeah. That is been my development for this present. I believe. Look, actually, I believe there are higher choices elsewhere. Have a look at Weibo. Add income is declining. That appears to be a development with Chinese language firms usually proper now. It makes you marvel in regards to the short-term state of that area’s financial system, fairly frankly. However there’s nothing actually distinctive with this enterprise, Jason. There is no compelling motive for shoppers to remain on the platform. Customers are heading to different platforms in droves right here, and actually, I believe buyers could be well-served to do the identical.

Jason Corridor: Emily, I hate to do it once more, however taking Toby’s aspect, it is a smaller much less worthwhile enterprise than it was seven years in the past, yet one more unhealthy quarter. Is there something redeemable?

Emily Flippen: I evaluate Weibo to possibly even a enterprise like eBay the place you can also make the argument. Does this firm really want to exist? However there’s in all probability nonetheless lots of leverage that administration can do with what’s in any other case a really worthwhile, very cash-generating asset. They’re shedding out on advert {dollars} to competitors like Purple Observe, in fact, and the platform is declining in reputation. However administration workforce appears conscious and OK with that. They nonetheless have a whole bunch of tens of millions of month-to-month energetic customers. They monetize decently nicely. They’ve working margins north of 27% in the latest quarter, a lot money that they are truly doubling their working earnings simply primarily based off the curiosity earnings they’re producing off of their money sitting there of their financial institution accounts. On a worth to earnings foundation, the enterprise is buying and selling at a PE ratio of 5 occasions. Fairly actually worth like the corporate goes to vanish within the subsequent decade. Is that potential? Sure, in fact, it is potential. I believe this doesn’t go David Gardner’s “snap’ check. I believe in the event you snap your fingers, it is totally potential we are able to exchange Weibo a meddy assortment of different social media platforms. However with oodles of money circulate, a whole bunch of tens of millions of {dollars} of tremendous low CapEx and reinvestment bills, I believe if they’ll simply work out find out how to higher monetize customers that exist on their platform, this could possibly be an underappreciated alternative.

Jason Corridor: This has been lots of enjoyable. Toby, Emily, thanks each a lot for having this enjoyable dialog. Emily, I’ll go and hand you the keys again and you may drive us residence.

Emily Flippen: Sure, Jason, thanks a lot for coming in and enjoying host and permitting me to entertain you each. 4 Chinese language firms that reported earnings this morning, sure, but in addition are alternatives that I believe are generally going beneath appreciated or missed by alternatives. Jason, thanks for taking part in host, and Toby, thanks for taking part in the bear to my bull for these alternatives. Listeners, thanks all a lot for becoming a member of Motley Idiot Cash right this moment. As all the time, individuals on this system might have curiosity within the shares they talked about and the Motley Idiot might have formal suggestions for or towards, so do not buy or promote shares primarily based solely on what you hear. All private finance content material follows Motley Idiot editorial requirements, and it is not permitted by advertisers. Ads are sponsored content material and are present for informational functions solely. To see our full promoting disclosure, please take a look at our present notes. For Jason Corridor, Toby Bordelon, and your complete Motley Idiot Cash workforce, I am in Emily Flippen. We’ll see you tomorrow.