Please ensure Javascript is enabled for purposes of website accessibility

Why Baozun Stock Was Sliding Again Today

By Jeremy Bowman - May 22, 2020 at 3:28PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the Chinese e-commerce company fell on delisting concerns.

What happened

Shares of Baozun (BZUN -1.09%) headed lower for the second day in a row as investors continued to sell the stock on fears that Chinese stocks would be delisted from U.S. stock exchanges.

Baozun was down 9.3% as of 3:17 p.m. EDT.

An Asian man delivering a package as someone signs for it on a smartphone

Image source: Getty Images.

So what

The latest salvo in the feud between the U.S. and China, which has taken on a new dimension due to the coronavirus pandemic, is the Senate's passage on Wednesday of a bill that threatens to delist Chinese stocks from U.S. exchanges. Should it become law, the Holding Foreign Companies Accountable Act (HFCAA) would tighten the rules for international companies that want to list their stocks on U.S. exchanges. 

The bill is seen as political retribution against China for the coronavirus, and was also drafted in response to the fraud uncovered at Luckin Coffee and similar allegations at other Chinese companies. 

Baozun helps multinational companies like NikeStarbucks, and Microsoft with their e-commerce operations in China, handling things like IT, warehousing, and marketing. Since the company depends more on business from American companies than most of its Chinese peers, it may be more vulnerable to the impacts of any delisting law or if U.S. markets further stigmatize Chinese companies.

Now what

Baozun is set to report first-quarter earnings on June 2. In a letter to shareholders in April, CEO Vincent Qiu acknowledged that the COVID-19 pandemic had presented some challenges to the company, but also said that it's leading more businesses to recognize the value of e-commerce and the need to develop a greater online profile, which could drive Baozun's growth. 

After their recent slide, Baozun shares are trading near a three-year low despite the fact the company has been putting up solid growth. If it delivers better-than-expected results in its earnings report, the stock could start to bounce back, as other Chinese e-commerce stocks like Alibaba and JD.com are trading near recent highs.

Because of the impact of the pandemic, analysts forecast that Baozun's revenue growth will slow to 9.4% and that earnings per share will fall from $0.13 to $0.02.

 

  

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Jeremy Bowman owns shares of Baozun, JD.com, Nike, and Starbucks. The Motley Fool owns shares of and recommends Alibaba Group Holding Ltd., Baozun, JD.com, Luckin Coffee Inc., Microsoft, Nike, and Starbucks and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Baozun Stock Quote
Baozun
BZUN
$9.04 (-1.09%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
389%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.