Why Zulily Inc. Stock Tumbled

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Zulily Inc. (NASDAQ: ZU  ) were getting torn apart today, falling as much as 10% and finishing down 7% on a momentum-sell off that swept the market.

So what: There was no major news pushing shares of the mom-focused online retailer down today as the Nasdaq fell 1.4% and the small-cap Russell 2000 index also dropped 1.2% on a broad sell-off. Other big names to fall for no good reason included Twitter, which slid 7%, and Yelp, which also lost 7%. Concerns that stocks may be overvalued as earnings season kicks off seemed to drive today's sell-off, and momentum stocks have been particularly volatile over the past few months.

Now what: Zulily shareholders are no stranger to wild swings at this point. After debuting at $22 a share in November, the stock rocketed as high as $73 in February on a blowout earnings report. Since then, the share price has returned back to earth, falling in May after missing expectations in a follow-up quarterly report. Expectations for Zulily are high, and the company is posting incredible top-line growth numbers, with sales expected to jump 72% this year alone. Still, it will be a while before profits can justify the $34 share price it trades at today. I'd encourage investors to ignore today's momentum-based drop, but this highflier could easily see more disappointing days if near-term results come up short.

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