From the wealth guide to the stock market plague, Cathie Wood, the head of Ark Invest and known as the "female Buffett", only needs a distance from Baidu, Inc..

In 2020, ARK went smoothly, and this year, all five active funds of ARK walked out of a steep upward curve. With such a performance boost, coupled with the tough style of ARK: Zhong Cang technology stocks, which pay great attention to mass communication (not only publish their research results generously on social media, but also disclose their position structure on the official website, update the daily position details of each product every trading day, etc.), allowing investors to "copy their homework" casually, ARK once became a light for retail investors, and many people chose to eat meat and soup with it.

The most famous case in the history of ARK is when Tesla, Inc. 's stock price hovered at a low level and made a lot of money, but for Chinese investors, ARK is more known than its heavy position after Baidu, Inc..

There is a classic case of investing in Tesla, Inc., the market places high expectations on ARK betting on Baidu, Inc., but the reality has proved that the aura of the goddess is not so long-lasting.

Honeymoon of ARK and Baidu, Inc.

The honeymoon of ARK and Baidu, Inc. began in December 2020.

According to ARK's annual report, it already held some shares in Baidu, Inc. (held by ARKQ and ARKW funds) in the first half of 2020, and Baidu, Inc. was classified as an interactive media and services sector.

The relationship between the two changed qualitatively in December: on December 10, 2020, ARKK, ARK's fund focused on investing in subversive innovation listed companies, first built a position in Baidu, Inc., buying 170000 shares of Baidu, Inc., and then increased its positions in batches successively. On December 30, the position of Baidu, Inc. of ARKK soared to 1.7 million shares. At the same time, ARKW, another fund owned by ARK, also began to buy Baidu, Inc. shares. ARK's three major funds, ARKK, ARKQ and ARKW, all have positions in Baidu, Inc..

With the blessing of ARK, Baidu, Inc. 's share price, which is entering the track of recovery, sat directly on the rocket, and following ARK to buy Baidu, Inc. became a choice for many retail investors at that time. Why is ARK so magical?

As the head of ARK, Sister Mu, who was born in 1956, is now in her sixties. After graduating from the University of Southern California majoring in financial economics, she worked at Capital Research, Jennison Associates, Tupelo Capital and Lianbo assets, from assistant economist to investment chief. In 2013, she resigned from Lianbo to start a business and founded ARK Invest in January of the following year.

Since its inception, ARK Invest has mainly focused on science and technology, with investments in six areas: artificial intelligence, autopilot, financial technology, gene sequencing, robotics and 3D printing. To put it rudely, ARK's preferences are actually consistent with the hottest areas of the primary market in the past few years, but compared with the primary market's strategy of early investment in exchange for late growth leverage, facing the secondary market will more test the vision of the fund, of course, coexisting with the risk is to seize the huge wealth opportunities brought by innovative companies.

This strategy is reflected incisively and vividly on Tesla, Inc.: in 2018, when Tesla, Inc. was mired in the quagmire of shorting Wall Street and Musk planned to privatize Tesla, Inc., wooden Sister issued an open letter expressing support for Tesla, Inc.. She expects Tesla, Inc. 's share price to reach $4000 in the next five years. Tesla, Inc. is the epitome of capital mismatch. When the market understands this, Tesla, Inc. 's share price will rise, and then investors will regret the current shortsightedness.

Tesla, Inc. 's stock price climbed all the way up in 2020 in response to Mu Jie's previous prediction that while making a lot of money, Mu Jie and ARK were also sent to the altar.

It is under this halo that in December 2020, when ARK set its sights on Baidu, Inc., who had already been rumored to build a car, ARK continued to increase its position in Baidu, Inc. after 2021. By mid-January, ARK funds held more than 2.7 million Baidu, Inc. shares, worth nearly $600m. Among the three flagship ETF of ARK, Baidu, Inc. is the eighth largest position of ARKQ Autonomous Tech and Robo Automation Fund and the only Chinese-listed stock in the top 15 positions of ARKK Disruptive Innovation subversive Innovation Fund.

Like Musk before, the company that tried to promote its bets to the market, in an interview with Yahoo Finance in March, explained why she had a heavy position in Baidu, Inc.: "after the electric car breaks the life limit, self-driving is inevitable." From Baidu, Inc. 's current point of view, it is ambitious in the field of self-driving, and Baidu, Inc. is not a traditional car manufacturing company, it started as a search engine, with map navigation and so on is closer to a technology company, and its self-driving project is moving very fast. "

Take a ride on the car Dongfeng, and there is ARK Jiancang endorsement, driven by multiple factors, Baidu, Inc. 's share price has advanced by leaps and bounds.

With the capital carnival created by newly built cars in 2020, a story similar to Tesla, Inc. seems to have slowly unfolded in front of the market.

Baidu, Inc. Capital Bureau

While ARK takes the lead in buying, Baidu, Inc. is also making intensive efforts to plan his own capital bureau.

After the car-building rumors intrigued investors for a month, on January 11 this year, Baidu, Inc. officially announced the news of entering the market and announced the formal formation of a smart car company to enter the automobile industry as a whole car manufacturer. Geely holding Group will become the strategic partner of the new company.

Baidu, Inc. 's share price was added to more fuel and continued to rise, hitting a high of $340 at one point, and its market capitalization broke through the $120 billion mark.

After telling the new story to the market, the plan for a secondary listing in Hong Kong is also moving forward rapidly. On the evening of March 9, Hong Kong stocks disclosed Baidu, Inc. 's secondary listing prospectus, launched on March 12, and listed on the Hong Kong Stock Exchange on the morning of March 23. It took only 10 working days for running to be listed. On the first day of listing, Baidu, Inc. opened 0.79% higher at HK $254 per share, raising a net amount of HK $23.682 billion.

For Baidu, Inc. 's prospects, a number of institutions are very optimistic. For example, CITIC valued Baidu, Inc. based on the SOTP method, giving the company a target price of $360 / ADR and a "buy" rating. CITIC believes that Baidu, Inc. Mobile has an ecological valuation of about US $60 billion, Baidu, Inc. intelligent driving is valued at US $10 billion, and Baidu Cloud is expected to reach the order of US $17-20 billion. At the same time, the hardware business will continue to earn 5GAIoT dividends, and iQIYI, Inc. is also expected to continue to improve operational efficiency.

Also optimistic about Baidu, Inc. is CICC, which believes that the Apollo car intelligent business segment could be valued at $25.8 billion and Robotaxi at $28.1 billion. CICC also believes that Apollo will become an important growth engine and the most important basis for valuation switching in the future. Baidu, Inc. will be given a target price of US $394.21 to maintain a rating that outperforms the industry.

Us stocks rose, Hong Kong stocks rose, and Baidu, Inc., who had been in the doldrums for a long time, was proud of himself in the capital market. However, the detailed breakdown of Baidu, Inc. 's financial statements and fundamentals, the realistic support of the above analysis is actually very fragile.

In 2020, Baidu, Inc. 's performance was not eye-catching. In the four quarters of that year, Baidu, Inc. 's revenue changed by-7%,-1%, 1% and 5% respectively, showing a dismal year-on-year decline or slight increase.

On the one hand, Baidu, Inc. 's core business (Baidu core, which is interpreted as the combination of search services and trading services) revenue growth is slow or even negative. In the first quarter of 2020, Baidu, Inc. 's core business revenue fell 13 per cent year-on-year, 3 per cent in the second quarter, 2 per cent in the third quarter and 6 per cent in the fourth quarter.

On the other hand, Baidu, Inc. 's core business is still Baidu, Inc. 's largest cash cow, accounting for more than 70% of revenue, so it is difficult for investors to have an optimistic imagination about Baidu, Inc. 's growth space. At the same time, the new business that has been invested for many years is not good at the revenue level. In other words, the real return from the new business is limited, while the old business is already tired.

At the same time, the Apollo business, which is seen by some analysts as the engine of Baidu, Inc. 's strong growth in the future, has actually had an ill-fated fate internally in the past two or three years, and the model also faces a natural contradiction, that is, it is difficult for car companies to cede core areas.

Baidu, Inc. 's share price gradually picked up in the third quarter of 2020, thanks to the general environment-the implementation of quantitative easing by many governments, the entry of a large number of retail investors in China, the United States and other places, and abundant capital in the capital market, which contributed to the rise of the stock market. In the context of its net profit in the first three quarters of 2020 and the gradual recovery of its core business in the third quarter, the long-term downturn in share prices triggered a short-term rise in long-term sentiment in the market, showing a valuation repair in the fourth quarter.

The car-building news exposed in December and the demonstration effect of ARK pushed Baidu, Inc. 's share price into the sky, but the effect of cardiotonic did not last after all. Baidu, Inc. 's share price fluctuated downward after hitting a peak of $340. on May 14, it fell below the $180,000 mark, and its market capitalization fell back to just over $60 billion, "before liberation."

Cut the meat and leave the field.

ARK was hit hard by Baidu, Inc. 's lackluster performance.

According to the first quarterly report of ARK, as of March 31, Baidu, Inc. still ranked third in the ARKQ position structure, accounting for 5.1% of the ARKQ position structure, Baidu, Inc. ranked sixth in the position structure, accounting for 3.3%.

The impact of heavy positions of Baidu, Inc. on ARKQ performance is very obvious, according to the quarterly report, Baidu, Inc. is the first drag on ARKQ performance.

ARK said bluntly in its first-quarter earnings report that Baidu, Inc. was one of the biggest factors affecting ARKQ's performance in the first quarter, while ARK's analysis of Baidu, Inc. 's falling share price was that the liquidation of Archegos (the hedge fund manager Bill Hwang's position explosion that sparked a heated discussion in the market some time ago) forced investment banks to sell, causing market panic, the delisting of Chinese stocks, and related government actions.

Although it is said that Baidu, Inc. is not to blame for Baidu, Inc. 's fall, ARK decisively chose to cut the meat and leave the field in practice. In May, ARK sold Baidu, Inc. for several trading days in a row. According to the information disclosed by ARK on May 14, the shares held by ARK funds in Baidu, Inc. have shrunk significantly.

As the flagship fund of ARK, the proportion of Baidu, Inc. 's position held by ARKK has dropped to 0.02%. This can be seen from the attitude of arm towards Baidu, Inc..

The stumble on Baidu, Inc. basically reflects the situation of ARK2021, and ARK's fund assets have fallen below $40 billion as technology stocks have tumbled recently. After the disillusionment of the myth, although ARK and Sister Wood still have followers, the mood of regarding ARK as an operation guide has quietly changed. In the face of ARK entry, the attitude of many investors has changed from "rush" to "escape".

After the tide faded, Baidu, Inc. was still the same Baidu, Inc., but wooden Sister was no longer that wooden Sister.