Will Vipshop Holdings Beat Out Dangdang and LightInTheBox?

Vipshop Holdings (NYSE: VIPS  ) will release its quarterly report on Monday, and investors have bid shares of the Chinese online-retail company to new heights in recent months. Even facing strong competition from rivals E-Commerce China Dangdang (NYSE: DANG  ) and LightInTheBox (NYSE: LITB  ) , Vipshop has stayed on a fast-growth trajectory that has momentum investors excited about its long-term prospects in serving the growing Chinese consumer market.

Vipshop presents a familiar conundrum for investors in high-growth stocks. The flash-sale specialist definitely has huge potential from the explosion in activity in China's Internet, and its recent growth history shows how successful Vipshop has been at capitalizing on its opportunity. Yet with extremely high expectations for the company, even a minor shortfall could cause dramatic losses for investors. Let's take an early look at what's been happening with Vipshop Holdings over the past quarter and what we're likely to see in its report.

Stats on Vipshop Holdings

Analyst EPS Estimate

$0.21

Year-Ago EPS

$0.01

Revenue Estimate

$364.65 million

Change From Year-Ago Revenue

134%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Can Vipshop earnings keep up their huge growth pace?
Analysts have kept getting more enthusiastic in their views on Vipshop earnings, adding $0.03 per share to their full-year 2013 estimates and adding a full 10% to their 2014 projections. The stock has soared in response, climbing 55% since early August.

Vipshop showed investors just how vulnerable the company's shares are to disappointments when it released its second-quarter earnings report in August. Vipshop topped earnings estimates by a penny per share on a whopping 160% jump in revenue. But even a mild reduction in revenue projections for the third quarter led investors to become bearish on the stock quickly, sending Vipshop shares down 16% on the negative guidance.

So far, Vipshop's stock has held up better than its rivals. LightInTheBox sustained an even bigger drop after its August report, plunging 40% after missing revenue estimates and giving similarly poor guidance for the quarter. Now, LightInTheBox shares trade below the company's IPO price. Dangdang, which shares Vipshop's domestic focus in contrast to LightInTheBox's greater international presence, has also stumbled lately. Dangdang said just two weeks ago that it would miss its previous revenue forecast, sending shares of all three online retailers down sharply for the week.

One question facing Vipshop is whether Chinese Internet giant Baidu (NASDAQ: BIDU  ) will buy the Nuomi.com unit from Renren. Nuomi is a flash-sale website that competes against Vipshop, and if Baidu were to put its substantial resources behind the business, it could pose a much larger competitive threat than it does in Renren's hands. That said, some have argued that Baidu could simply buy Vipshop if it's interested in making a big entry into the flash-sale space.

In the Vipshop earnings report, be sure to watch future guidance very closely. A miss on past sales would be problematic, but a pullback in expectations for revenue going forward could bring shares crashing down once again.

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