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Why Baozun Stock Jumped Today

By Rich Duprey – Jul 2, 2020 at 6:38PM

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The Chinese e-commerce services company has been on an upward trend since March.

What happened

Shares of Chinese e-commerce services provider Baozun (BZUN -2.27%) shot up nearly 9% on Thursday on seemingly no news, though there had been some bullish analyst sentiment published in the past 24 hours.

So what

Zacks Equity Research highlighted Baozun on Wednesday as a stock benefiting from online shopping demand due to the pandemic. The e-commerce services company is often compared to Shopify, and analysts believe it can benefit from China's economic recovery.

Woman iwth credit card and shopping bags in front of laptop

Image source: Getty Images.

Zacks listed Baozun as a strong buy and one that investors should consider buying today. The specialist in online business services is already a profitable operation, and while it trades for around 30 times earnings, if it capitalizes on the dual trends of economic recovery and greater dependence on online shopping, that valuation may seem cheap by comparison down the road.

Now what

Although Baozun could still be considered a small-cap stock, its $2.5 billion market cap suggests bullish sentiment like this shouldn't be able to influence its stock price to such a degree. Yet 16% of the stock's float is sold short, so it could be that as traders moved in, boosting its prospects, short-sellers covered their positions, lifting the shares.

However, with its days to cover down to just four days -- anything over seven days is considered a lot -- it’s not likely to be subject to such a short-squeeze and Baozun may just be a business that's hitting its stride.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Baozun and Shopify. The Motley Fool has a disclosure policy.

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