What happened

Shares of e-commerce company Yunji (NASDAQ:YJ) dropped on Monday due to an analyst downgrade from Morgan Stanley. The stock was previously up for 2020 after more than doubling in the past couple of weeks. But perhaps that was too far too fast. As of 11 a.m. EST today, Yunji stock was down 17%.

So what

Morgan Stanley analyst Eddy Wang gave Yunji stock an underweight rating, meaning Wang simply expects the stock won't return as much as a benchmark average, and will underperform comparable stocks. Wang's new price target is $3.40 per share, lower than where the stock closed last week.

A rising red arrow breaks near the top, resulting in the tip of the arrow pointing down.

Image source: Getty Images.

If you're buying individual stocks, like Yunji for example, then beating the market is the name of the game. An everyday investor can get average returns by simply buying an index fund -- and with a lot less time-consuming due diligence!

It's important to form your own investing thesis for why you believe a stock can beat the market average. But there's nothing wrong with considering the informed opinions of analysts like Wang. Today, it seems many investors are taking a cue from Wang and selling Yunji stock in order to beat the market with their investments. 

Now what

While Yunji stock is selling off today with the downgrade, it's important to remember why it was up so much in the first place. The company reported a cooperative deal with a streaming-video platform called Douyin in China. Douyin is owned by TikTok parent company ByteDance. Earlier this year, Yunji stock popped after running a successful event on Douyin, and investors like how it's continuing to pursue this interesting e-commerce strategy. 

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.