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Can Dangdang, Vipshop, and LightInTheBox Keep It Up?

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Last week was a rewarding one for investors in China's publicly traded online retailers. LightInTheBox (NYSE: LITB  ) and daily-deals speedster Vipshop (NYSE: VIPS  ) soared 15% on the week, and E-Commerce Dangdang (NYSE: DANG  ) was no slouch with its 11% pop.

There was no material news triggering the rally. Investors simply rotated into the volatile Chinese e-tail market. 

One can argue that the tone was set a week earlier, when LightInTheBox rallied after acquiring Adora in an all-cash deal. It may seem unusual for LightInTheBox -- a company based in China but generating roughly 80% of its sales by selling its locally sourced formal dress and housewares in Europe and North America -- to snap up a Seattle-based social e-commerce provider. However, the move helped give the market a new reason to warm up to LightInTheBox after putting up with back-to-back quarterly disappointments since it went public last summer.

LightInTheBox has now come through with back-to-back weeks of double-digit percentage gains, and it's now trading comfortably above its $9.50 IPO price. It still has to prove that it can live up to expectations, but it's not as if Wall Street's thrown in the towel on LightInTheBox. Analysts see revenue and earnings per share climbing 28% and 40%, respectively, this year.

Vipshop is growing even faster. The provider of flash sales on branded apparel items in China was one of 2013's biggest winners, seeing its shares soar 369% last year. Vipshop isn't cheap at this point, but it's trading at a discount to its heady growth rate, as analysts see profitability more than doubling in 2014 on a 70% top-line burst.

Dangdang is the relative laggard in the group. It's the only one that's expected to post a loss this year, and its projected 20% in revenue growth pales in comparison to LightInTheBox and Vipshop. However, the leading Chinese online book retailer has been able to grow across other media and general merchandise categories. The red ink is disappointing, but the deficits continue to narrow dramatically.

All three companies are well positioned to grow in 2014 even though they are catering to entirely different markets. Last week's double-digit gains may not have been earned by new developments, but all three Chinese e-tailers have the growth and improving fundamentals to keep them moving in the right direction. 

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  • Report this Comment On January 21, 2014, at 9:57 AM, Decoy0527 wrote:

    I have done well with Renn but my hope is that the industry continues to consolidate and that Renn is bought out. Revenue growth seems to come easy but profits not so easy. Consolidation seems the answer to me and Renn may not be big enough to get to the top alone.

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Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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Related Tickers

8/27/2015 4:01 PM
DANG $6.36 Up +0.36 +6.00%
E-Commerce China D… CAPS Rating: **
LITB $2.99 Up +0.26 +9.52%
LightInThe Box Hol… CAPS Rating: *****
VIPS $19.89 Up +1.26 +6.76%