What happened

Shares of Vipshop Holdings (NYSE:VIPS) got crushed on Wednesday after the company reported results for the second quarter of 2020. The Chinese e-commerce company did demonstrate revenue growth in Q2. But investors probably expected greater acceleration due to the COVID-19 pandemic.

Furthermore, guidance for the remainder of 2020 failed to impress, leading investors to book gains from a Vipshop stock that was already up around 70% year to date.

VIPS Chart

VIPS data by YCharts

So what

Investors don't talk about Vipshop much, but it's the sixth largest e-commerce company in China, according to eMarketer. E-commerce has been a big story in 2020, as the coronavirus pushed consumers toward online channels. That being the case, investors had big expectations for Vipshop's business in Q2.

Vipshop's Q2 revenue, however, only grew 6% year over year to $3.4 billion. While that wasn't as high a growth rate as many other e-commerce companies, it far exceeded its own guidance. Management had guided for 5% revenue growth at the high end. So the company did indeed receive a coronavirus bump. 

Furthermore, Vipshop grew its net income 89% year over year to $218 million. Considering the company beat revenue guidance and expanded the bottom line, one would have expected the stock to rise. And that may have been the case, if the company hadn't given lackluster guidance.

A frustrated man puts his hands on his face with a down stock chart in the background.

Image source: Getty Images.

Now what

CEO Eric Shen said, "We believe that we are well positioned to continue to gain market share in China's discount retail segment." However, it appears any market-share gains will be modest for now. For the upcoming third quarter, Vipshop management only expects revenue to grow 5% to 10% year over year. 

A final note that could be effecting Vipshop stock today: The company's CFO will be stepping down in November for personal reasons. This is completely normal and doesn't mean investors should be suspicious. But they might be jumpy considering this is an international stock. Vipshop is a Chinese company and financial results are unaudited.

Since the CFO's resignation isn't effective immediately, I'm not inclined to worry about anything fishy going on. But it's worth acknowledging some investors might be playing it more safe than sorry.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.