What Baidu, Inc., Tesla Motors, Inc. Have in Common -- and What They Don't

A number of tech giants are developing autonomous cars, including Baidu Inc (ADR) (BIDU)

Mar 11, 2015 at 8:48 AM
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Self-driving vehicles are all the rage right now, despite recent poll data suggesting most Americans -- myself included -- find the idea a bit scary. Earlier this week, Chinese tech issue Baidu Inc (ADR) (NASDAQ:BIDU) announced it may be getting into the autonomous car game -- perhaps as soon as this year. Meanwhile, San Franciscans have been buzzing about this rad self-driving Mercedes.

BIDU and Mercedes are hardly the only major players in the space, though. Tech powerhouses such as Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOGL), as well as electric vehicle maker Tesla Motors Inc (NASDAQ:TSLA), have all boarded the bandwagon -- though it remains to be seen whether these developments will revolutionize the auto industry.

While we can't read the proverbial tea leaves regarding the future of self-driving cars, we can take a fairly deep look at the shares of companies developing them. The two we'll highlight today are BIDU and TSLA, which appear headed in opposite directions on the charts.

Over the long term, BIDU has performed well. Based on its closing price of $210.39 on Tuesday, the stock has advanced 22% on a year-over-year basis. What's more, the shares have been consolidating atop their rising 50-week moving average -- which served as support in mid-2014 -- suggesting they may be on the verge of their next leg higher.

Weekly Chart of BIDU since January 2014 with 50-Week Moving Average

In spite of these technicals, there's plenty of skepticism being heaved toward BIDU. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.81 indicates put open interest outweighs call open interest among options with a shelf-life of three months or less. Also, this SOIR ranks near the top quartile of all comparable readings taken in the last 52 weeks, indicating a stronger-than-usual bias toward short-term puts over calls. A capitulation among skeptical option players could add fuel to Baidu Inc's (NASDAQ:BIDU) fire.

As mentioned previously, TSLA is in a much different position, technically speaking. Since topping out at a record $291.42 in early September, the shares have tanked 35% to trade at $190.32. More recently, the stock has underperformed the broader S&P 500 Index (SPX) by nearly 14 percentage points over the last month.

However, optimism remains among the brokerage bunch. Eight of 13 covering analysts rate TSLA a "buy" or better. If that's not enough, the equity's average 12-month price target of $267.82 stands in territory not charted since mid-September. Should these optimistic analysts reduce their ratings and/or price targets amid Tesla Motors Inc's (NASDAQ:TSLA) long-term downtrend, additional headwinds could be in store.

 

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