Up until now, Google has countered the mobile shift criticism by pointing out that the number of paid clicks they receive has been continuing to go up. Therefore, this is a sign that people are searching even more in a mobile world compared to a desktop only world. That's a good thing for them and they will eventually figure out how to monetize better the new mobile world.
This same logic applies to Baidu. However, Baidu has never seen its stock price slowed down yet by the shift to mobile.
Since the March 9, 2009 bottom, Baidu's shares are up 535% vs. 114% for Google's. And over the last two years, Baidu's shares had stayed above Google's shares until August of this year.
Now, Baidu's getting its day of reckoning on its search monopoly and mobile shift.
It still trades at a premium to Google though. Baidu has a 16.5 forward price-to-earnings ratio compared to Google's at 14.
Could it fall further? It's possible. Chinese high-flying tech stocks like Baidu certainly overshoot on the upside and downside. Recall that Baidu broke below $11 in December 2008 when people were liquidating anything that was high beta.
However, Baidu is still a very strong company with a solid management team. It deserves to trade at a premium to Google because of its smaller size and better growth prospects in China in the next few years relative to Western world that Google sells to.
Therefore, short term, Baidu's drop is probably close to done.
At the time of publication, the author was long AAPL.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.