What happened
Shares of Baozun Inc. (BZUN 0.32%) were down 9.5% at 1:41 p.m. EST on March 7, after having fallen nearly 11% earlier in trading.
There's not any big news out today that specifically pertains to Baozun; the company reported fourth-quarter earnings on March 6, but that was before market open yesterday, so there's already been a full trading session since the earnings report and management's conference call with investors.
Image source: Getty Images.
So what
While Baozun's fresh earnings report is probably playing some role in today's sell-off, it's likely that fears trade talks between China and the U.S. will fail to yield a positive outcome have investors concerned and selling.
Baozun isn't the only Chinese tech stock that's down today:
BZUN Price data by YCharts
The past year hasn't been good for many Chinese stocks, particularly technology stocks. Shares of Baozun are down over 47% from their peak in 2018, while iQIYI Inc and Baidu shares are down 41% and 42%, respectively, from their peaks.
Check out the latest earnings call transcript for Baozun.
Now what
There are some legitimate reasons for investors to be cautious. China's economic growth is indeed slowing; if projections that it will grow less than 6.5% in 2019 prove true, that would be the country's weakest GDP growth in nearly three decades. Moreover, a protracted trade war with the U.S. would almost certainly be bad for both countries.
But stock investors have to be willing -- and able -- to ride out short-term volatility if a company's long-term thesis is sound. And Baozun is absolutely a stock worth buying and owning for the long term, even as China's economic growth slows and risks of trade disagreements with the U.S. continue.
As Baozun CEO Vincent Qiu reminded investors on the earnings call, even if China's economic growth does slow, the country's burgeoning middle class continues to expand at a high rate, and retail is quickly shifting online there. Those tailwinds will likely persist for years to come, and Baozun is investing to be a major participant -- and beneficiary -- of that shift.
