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Here's Why Baozun Stock Fell 10% Today

By Jason Hall – Updated Apr 11, 2019 at 5:26PM

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The e-commerce services stock joined other Chinese tech stocks in a sell-off.

What happened

Shares of Baozun Inc. (BZUN 1.43%) 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

Shopping carts with U.S. and Chinese flags crashing into each other

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 Chart

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. 

Jason Hall owns shares of Baozun and IQ. The Motley Fool owns shares of and recommends BIDU and Baozun. The Motley Fool recommends IQ. The Motley Fool has a disclosure policy.

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