Bull vs. Bear: Chinese Stock Showdown

In this podcast, Motley Fool analyst Emily Flippen and contributors Jason Hall and Toby Bordelon:

• Go head-to-head on PDD Holdings.
• Debate whether Baidu can self-drive its future.
• Do a speed round between Weibo and iQiYi: deep value or value traps?

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

A full transcript is below.

This podcast was recorded on Nov.18, 2025.

Emily Flippen: We're flipping the script today on Motley Fool Money as we put our bullhorns on and sharpen our bear claws to dig into Chinese stock earnings. It's Tuesday, November 18th. Welcome to Motley Fool Money. I'm your usual host, Emily Flippen. But today we're putting Fool contributor Jason Hall in the big chair so that you, Jason, can help facilitate a fun debate today between myself and Fool analyst Toby Bordelon.

Jason Hall: Emily, I'm never short on opinions. We know that, but on Motley Fool Money is a good idea to align those opinions with expertise. This morning we have earnings from four of the largest Chinese companies, and I know that you lived in China for four years. You have plenty of bullish thoughts that can be backed up with actual knowledge and expertise. We thought it would be fun to match you up with our notorious Chinese stock skeptic Toby Bordelon to have a bit of a fast paced bull-bear debate. We'll get to iQiyi, Weibo, and Baidu later. But first, let's start with a stock that you actually own in your portfolio. That's PDD Holdings. Ticker symbol is PDD, formerly known as Pinduoduo. It's an e-commerce powerhouse. Sears down today after what seemed like a pretty solid quarter. Emily, is this a buying opportunity?

Emily Flippen: I actually do think it's buying opportunity, Jason. Now, to your point, I do own this in my personal portfolio, so I'm arguably a little biased here, but this was a solid quarter. Revenue growth wasn't anything to write home about, but it was in line with what the company was expecting, given the fact that they are operating in a more competitive and admittedly tariff-ridden environment. But the reason I like this company is because of its business model. Virtually everything flows through to the bottom line with this business. PDD on both the Pinduoduo marketplace in China as well as its Temu marketplace that serves a global audience doesn't generally own the inventory that it lists. It's just the payment infrastructure and logistics platform, and on its Chinese side, a majority of the revenue comes from ad placements. PDD Holdings was able to grow profits at nearly twice the rate of revenue in the quarter, even with all of the craziness going on with issues of dropshipping and the removal of de minimis in the United States, it has nearly 25% net income margins over the past year. I'm so compelled by this opportunity.

Jason Hall: Emily, I feel your energy here. But, Toby, I have a feeling you may be a little bit less glass half full than Emily is.

Toby Bordelon: Yeah, look, I got to be honest here. I'm not sure I would call 9% growth solid for a company like this. It's an e-commerce platform in a theoretically fast growing Chinese consumer economy, 9% ain't going to cut it because it's not meeting investor expectations here. If they can't get the growth rates up, I think the valuation multiples they're going to come down fast. My other problem here is the heavy spending they're doing. Management even went so far as to warn that profits are going to fluctuate due to things like higher marketing costs, merchant subsidies, investment in the platform. It's looking like a lot of what they expect this growth to be is going to be a lot more expensive going forward, and it signals the platform may not be very sticky for consumers.

Emily Flippen: My gosh, Toby, you think the valuation multiples are going to come down? This business has a market cap of somewhere like $180 billion. Nearly $60 billion of that is in cash. It has an enterprise value to EBITDA of less than 10 times while growing its bottom line earnings per share double digits. Even if the top line is only growing 9%, that's downright cheap. That's too cheap to ignore.

Toby Bordelon: Now, look, it's only cheap with the assumption that you're going to get a rebound on those growth rates. If we are in a permanent growth decline, the market is going to reset to a lower valuation at some point. From a platform and business investment standpoint, this could be a money pit, not a growth opportunity. The bigger picture, Emily, I think, is we don't know what's driving these results. What's the Temu contribution versus PDD? Who knows? What's the platform gross market value? No idea. Gross market volume? No idea there. What's the retention rate, the take rate? There's no disclosure with these things. Chinese companies, let's put it this way, they historically do not have the best reputation in terms of keeping all the numbers on the up and up. A refusal to share details on these things, doesn't give me a lot of confidence in what's really going on here.

Emily Flippen: Yeah, I think that's fair. I never get the full color that I want from Chinese companies and can feel a little criminal about the fact that they don't even give reportable segments when it comes down to what sales come from Temu versus the Pinduoduo marketplace. We disagree but still, I think the valuation is considerable for maybe more risk tolerant investors.

Jason Hall: Friends, this is what makes a market right here. Love the Foolish disagreement. Up next, we're figuring out if Baidu's autonomous car business can help drive it, self drive it to a successful future. Stick with us.

Welcome back to Motley Fool Money. Chinese stocks can be a non-starter for many investors, especially if you're talking about Chinese small caps. But Baidu, ticker BIDU, is one of very few exceptions for those that still want to invest in China, but with less risk. It's been described as the Alphabet of China. Baidu has made a name for itself in search, advertising, and its "other offerings" like self driving, but similar to its American counterparts, Baidu has been under fire for fears that AI could upend its search and related advertising businesses. Toby, did Baidu's latest results give any clues about how it's navigating those concerns?

Toby Bordelon: They did not, Jason, at least not in my opinion. I reinforce the belief that Baidu isn't doing it very well. Revenue is falling a little bit. That's problematic for a supposedly dominant platform in their market. Baidu has not done a great job of diversifying its revenue sources. It's really very ad-dependent still, and that core ad business is shrinking. That's in contrast. Some of the US tech giants who have had similar issues right when AI first burst on the scene, but their ad revenue is growing, for the most part. Cloud AI revenue for Baidu is not yet large enough to offset the decline they're seeing and that's a problem worsening. Overall margins are under serious pressure because the parts of the business that are growing, that they're investing in, are lower margin, meaning they got to grow faster offset the bottom line impact. Toss on concerns about the overall macro economy in China, and Baidu is just not that compelling to me. Now, you might say, "Look, hey, the thesis here is AI growth." I get that maybe. But management is telling us don't expect serious returns there anytime soon. We've got a declining core business, a low margin growth business, and an uncertain future of what AI could, if it does become a meaningful growth driver here. What it could be, and how profitable it's going to be at scale. For me, the upside here is just not justifying the risk I see.

Emily Flippen: Toby's right.

Jason Hall: Okay guys, thanks for listening to Motley Fool. We'll see you tomorrow.

Toby Bordelon: Unfortunately, you can't fly with the headline numbers here, which is Toby is right. The ad market in China right now it's bad across the board. Baidu in particular, it's dominance in search, especially, it's having the alphabet problem, it's still there, but they're losing ground, they're losing market share and revenue is falling, and its core business is ad placements, and that's just been incredibly weak for this company. But I do think we are starting to see some return on investment for these initiatives. While that hasn't made up for that core business falling, I think we're starting to see what the scale could be if Baidu does eventually get there. In addition to their search business, of course, they're also a leading Cloud infrastructure provider in China, so you can think a little bit like AWS here in the United States, and their subscription-based AI solutions grew 128% year of year. Now, these are solutions that were and are really expensive for Baidu to build out initially, but it seems that scale is starting to come. It's possible that a lot of the expenses, a lot of the costs that we saw Baidu experience over the last couple of years are going to be largely behind us now as Baidu looks to be a slightly more profitable future. While management hasn't necessarily guided for that yet, I do think that they can eventually move in that direction.

Jason Hall: The counter you're saying is that what we're seeing is lower margins in that growth business should start to improve as scale ramps up?

Emily Flippen: It's possible. I hesitate only because we haven't heard management come out and outright say that. Whereas, I think if we saw that going to happen over the course of, say, 2026, management would be very clear in terms of the guidance that they expect to come in. To Toby's point, a lot of the commentary we're getting from management, are just around their AI initiative. All of these other different pies that Baidu's fingers are stuck in right now. We don't see the actual tangible outcomes coming out from these initiatives yet, but I think it's entirely possible that over the course of say the next five years, over the course of the next 10 years, that all it takes is one of these pies to bake particularly well to more than make up for the core search business, even at that core search business does continue to decline. I actually think that the area that this could be that doesn't get nearly enough investor attention is self-driving solutions. We talk about Tesla and others. They get all the headlines about robotaxis, but, my gosh, Baidu has self-driving robotaxis already in operation in 22 cities across the world. In many locations, this is 100% fully driverless, actual commercial services being used by the Chinese public on a daily basis. This is not in a controlled environment, this is not something that is otherwise being heavily scrutinized or regulated. This is just a part of everyday life. I think the fact that Baidu in the opportunity that being a leader in robotaxis has, gives a lot of home country bias because American investors just don't see that the way we see it with Waymo or Tesla.

Toby Bordelon: My big concern here, you're right. There is potential, but big picture, if you have to be a lot more optimistic than management is being to make a reasonable wool case, I feel like that's a sign there are probably better opportunities elsewhere for your investment in capital.

Emily Flippen: What can I say, Toby? I'm an optimist at heart.

Jason Hall: Got to love it. Alright thanks, you guys. Coming up next, we're quick firing on two smaller Chinese stocks, still trying to find their place in the world. After quite a long time for at least one of them, we've got Weibo and iQiyi next right after this quick break.

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Toby Bordelon: Rebellion can spread like a plague.

Emily Flippen: Whatever you're into, it's right here. Prime Video. Subscriptions required. Content may include ads, 18 plus Ts and Cs supply.

Jason Hall: Go back to Motley Fool Money. As we wrap up today's show, let's discuss two lesser known Chinese stocks, Weibo and iQiyi. Weibo, Ticker WB is a bit of a washed up Chinese blog site. That's a great bull pitch right there. It's most commonly in the US compared to Twitter or X, and iQiyi is a video streaming platform with a business model that's similar to Netflix. It's struggled to retain growth, not very much like Netflix. Now, both businesses are compared to failures when stacked up next to Baidu and PDD Holdings. Toby, when you look at either of these two companies, does one stand out as redeemable to you or do you think both are uninvestable?

Toby Bordelon: Honestly, Jason, I stay away from both of them. Once upon a time, I actually had a very small investment in iQiyi, but I gave up on that when it was clear that this was going nowhere. Look, Baidu already owns 45% of that business, so if you really want to invest in it, you could just do it that way. As it turns out, it's been terrible for Baidu, too. It's been dragging them down at a time where they really don't need any other drags on their business, as we've already discussed here. IQiyi is losing money on an operating basis. I've got no expectation that changes anytime soon, honestly.

Jason Hall: All right, Emily. I've got a side with Toby a little bit here. He hinted at it, but there's some math that screams caution at me about iQiyi. I spent more money paying interest last year than it earned in operating income. That's tough to dig your way out of that. What's the bull case that it can see its way forward in a way where investors actually make money?

Emily Flippen: I hesitate again to say that. Yes, you're right. Again, these are right at face value, and I certainly have my work cut out to me to make a bull case for either of these businesses, but I love to play devil's advocate, and to your point, Jason, two sides do make a market. They're a lot less clear cut than Baidu or PDD, but I try to see the forest through the trees. In the case of iQiyi, the financial risk of the debt and the lack of profits are basically nonexistent for exactly the reason Toby mentioned. They're fully backed by the cash generating giant that is Baidu. Baidu won't, in my opinion, really let this company fail. IQiyi does have some really valuable properties. Unlike other apps, there isn't a clear competitor to iQiyi and Chinese streaming, so I could draw comparisons between them and Netflix in the past, getting up to speed and original content and scale in a country with billions of people. It's hard, it's expensive. Maybe they just need more time here. I think the risk of bankruptcy given their financial profile is still low with such smart backing.

Jason Hall: Let's move on to Weibo. Toby, based on your comments, I assume you think investors should pause here and move on too, right?

Toby Bordelon: Yeah. That's been my trend for this show. I think. Look, honestly, I think there are better options elsewhere. Look at Weibo. Add revenue is declining. That seems to be a trend with Chinese companies generally right now. It makes you wonder about the short-term state of that region's economy, quite frankly. But there's nothing really unique with this business, Jason. There's no compelling reason for consumers to stay on the platform. Users are heading to other platforms in droves here, and honestly, I think investors would be well-served to do the same.

Jason Hall: Emily, I hate to do it again, but taking Toby's side, this is a smaller less profitable business than it was seven years ago, yet another bad quarter. Is there anything redeemable?

Emily Flippen: I compare Weibo to maybe even a business like eBay where you can make the argument. Does this company really need to exist? But there's probably still a lot of leverage that management can do with what is otherwise a very profitable, very cash-generating asset. They are losing out on ad dollars to competition like Red Note, of course, and the platform is declining in popularity. But management team seems aware and OK with that. They still have hundreds of millions of monthly active users. They monetize decently well. They have operating margins north of 27% in the most recent quarter, so much cash that they're actually doubling their operating income just based off the interest income they're generating off of their cash sitting there in their bank accounts. On a price to earnings basis, the business is trading at a PE ratio of five times. Quite literally price like the company is going to disappear in the next decade. Is that possible? Yes, of course, it's possible. I think this does not pass David Gardner's "snap' test. I think if you snap your fingers, it's entirely possible we can replace Weibo a meddy collection of other social media platforms. But with oodles of cash flow, hundreds of millions of dollars of super low CapEx and reinvestment expenses, I think if they can just figure out how to better monetize users that exist on their platform, this could be an underappreciated opportunity.

Jason Hall: This has been a lot of fun. Toby, Emily, thank you both so much for having this fun conversation. Emily, I'm going to go and hand you the keys back and you can drive us home.

Emily Flippen: Yes, Jason, thank you so much for coming in and playing host and allowing me to entertain you both. Four Chinese companies that reported earnings this morning, yes, but also are opportunities that I think are sometimes going under appreciated or missed by opportunities. Jason, thank you for playing host, and Toby, thank you for playing the bear to my bull for these opportunities. Listeners, thank you all so much for joining Motley Fool Money today. As always, people on the program may have interest in the stocks they talked about and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards, and it's not approved by advertisers. Advertisements are sponsored content and are provide for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Jason Hall, Toby Bordelon, and the entire Motley Fool Money team, I'm in Emily Flippen. We'll see you tomorrow.

Emily Flippen, CFA has positions in PDD Holdings and iQIYI. Jason Hall has no position in any of the stocks mentioned. Toby Bordelon has positions in Baidu. The Motley Fool has positions in and recommends Baidu. The Motley Fool recommends iQIYI. The Motley Fool has a disclosure policy.