Robin Li Yanhong, Co-Founder and General Manager of Baidu in Beijing, China in October 2018.

Visual China Group | Getty Images

GUANGZHOU, China – Baidu shares rose just under 1% on Tuesday’s open on the company’s debut in Hong Kong.

The Chinese tech giant, which is already listed in the US, has raised $ 3.1 billion in its secondary listing in Hong Kong. The stocks reduced those gains during morning trading.

Unlike initial public offerings, secondary listings may not be greeted with massive rallies on day one because the company’s shares are already traded on another exchange.

The Hong Kong listing is a big moment for Baidu, China’s largest search engine. The company had a difficult few years as of mid-2018, lagging behind competitors like Alibaba and Tencent. Baidu wasn’t moving fast as Chinese users flocked to mobile search and a tough advertising market weighed on business.

However, a turnaround spearheaded by CEO Robin Li has focused on convincing investors that the tech giant is leading the way in artificial intelligence and autonomous driving to diversify its revenue streams beyond advertising. And that seems to be paying off.

In mid-May 2018, US-listed Baidu shares closed at $ 284.07 per share, a record high at the time. As a result, the stock fell over 70% to a low of $ 83.62 in March 2020 due to the stock market crash. That was the lowest close since April 2013.

However, since the March 2020 low, stocks have soared over 200%. Baidu shares hit an all-time high of $ 354.82 in February.

“I think EV (electric vehicles) is part of the story. At the same time, cloud computing and the integration of AI are all the areas that Baidu has invested very heavily in since 2014 and we are only just beginning to see the fruits of that work,” Brendan Ahern, Chief Investment Officer at KraneShares, told Squawk Box Asia on Tuesday.

Baidu has an autonomous propulsion system called the Apollo that can be sold to automakers. The company founded an independent electric vehicle company in collaboration with the Chinese car maker Geely. Baidu is also testing robotic taxis in cities, including Beijing. And last month, the company launched an intelligent transportation project in the southern Chinese city of Guangzhou, the largest to date.

James Lee, US and China internet analyst at Mizuho Securities, has set a price target of $ 350 on US-listed Baidu shares, up 31% from Monday’s closing price on Wall Street. He said the autonomous ride could be worth $ 40 billion and that the Chinese government will continue to support the industry with favorable policies. Lee also said he expected Baidu’s advertising business to continue to gain momentum in the first quarter of this year.

“We like the fundamentals of the company and we continue to believe that Baidu shares will outperform the market,” Lee told Street Signs Asia on Tuesday.

In the meantime, Baidu has tried to further diversify its sources of income. The company has raised $ 2 billion worth of cash for its Kunlun artificial intelligence semiconductor unit.