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Why Jumei International Holding Stock Is Soaring Today

By Anders Bylund – Aug 27, 2018 at 3:26PM

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The online retailer delivered strong earnings in spite of falling sales in the second quarter, giving investors a rare moment of jubilance.

What happened

Shares of Jumei International Holding (JMEI) jumped as much as 26.2% higher on Monday following a strong earnings report. As of 2:40 p.m. EDT, the stock had cooled down to a 15.9% gain.

So what

The China-based e-tailer reported second-quarter results after the closing bell on Friday, giving investors the weekend to mull over its report. Net revenue in the first half of 2018 fell 23% year over year to $369 million, driven by lower order volumes and fewer active customers. At the same time, adjusted earnings soared from $0.11 to $0.69 per American depositary share.

A city street corner, featuring large billboards and several marquees with Jumei's name and logo.

Image source: Jumei International.

Now what

Jumei's strong bottom-line result sprung from tight operating cost controls and a more efficient order-fulfillment process. The business mix also shifted away from low-margin online product sales and into more profitable segments like the third-party Marketplace selling service and TV content production.

The stock is prone to wild swings due to its small-scale operations, low media and analyst interest, and generally plunging share prices. Jumei investors have absorbed a 35% haircut so far in 2018 and a 92% decline since the IPO in 2014.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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