Written by Brenda Nakalema

Baidu Stock Drops Amidst Delisting Fears

Baidu stock dropped precipitously after U.S regulators included the Chinese search giant on its expanding list of companies that could …

Baidu stock dropped precipitously after U.S regulators included the Chinese search giant on its expanding list of companies that could be removed from the American stock exchanges.

Baidu (ticker: BIDU) as well as four other Chinese companies found themselves on the Securities and Exchange Commission’s provisional watchlist of foreign companies that face possible delisting if they refuse U.S regulators from reviewing their audits for three years consecutively. These companies find themselves between the proverbial rock and hard place because Chinese law forbids them from such exposure.

Baidu’s shares in Hong Kong dropped 3.4%. American depository receipts of Baidu also dropped by roughly 2% in premarket trading on Thursday, after an initial 2.6% drop on Wednesday.

In a statement released on Thursday, the company said it understood the SEC’s action may have been the result of filing its annual report on Form 20-F for the fiscal year ended Dec 2021.

“The company understands the SEC made such identification pursuant to the [Holding Foreign Companies Accountable Act] and its implementation rules issued thereunder, and this indicates that the SEC determines that the company used an auditor whose working paper cannot be inspected or investigated completely by the Public Company Accounting Oversight Board.”

“The Company has been actively exploring possible solutions,” said Baidu in a statement, adding that it would continue in its efforts to comply with applicable laws and regulations in both countries and also “strive to maintain its listing status on both Nasdaq and The Stock Exchange of Hong Kong Limited.”

The other companies include online brokerage platform Futu Holdings (ticker: FUTU), aquaculture equipment provider Nocera (ticker: NCRA), biopharmaceutical company Casi Pharmaceuticals (ticker: CASI), and video streaming platform iQIYI (ticker: IQ) that have been added to the SEC’s provisional list for potential delistings; the total number of identified companies currently stands at 11.