Please ensure Javascript is enabled for purposes of website accessibility

Why Baozun Stock Pulled Back Today

By Jeremy Bowman - Updated Jan 27, 2021 at 4:28PM

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

Yesterday's gains were reversed.

What happened

Shares of Baozun (BZUN 5.76%) were falling today, one day after the stock surged on news of a partnership with iClick Interactive Asia Group and on an apparent short squeeze.

There was no news out on the stock today, meaning the 10.3% slide was likely a correction from yesterday's 35% gain.

The word "Baozun" made from its customers logos

Image source: Baozun.

So what

It's been a bizarre week on the market as several heavily shorted stocks like GameStop and AMC Entertainment have gone through the roof due to massive short squeezes executed by traders on platforms like Reddit.

Yesterday, Baozun seemed to benefit from similar behavior with a likely short squeeze driving the stock up as shares popped on heavy volume. As of the end of December, about 20% of Baozun's float had been sold short.

Today, Baozun, which provides e-commerce services like fulfillment and marketing for multinational companies in China, fell as the broader stock market pulled back as well, perhaps on fears that prices have become inflated and divorced from fundamentals, especially given the extreme short squeezes. Comments from Fed Chair Jerome Powell about moderating economic growth also seemed to push stocks toward closing.

Now what

It can be difficult for investors to tune out noise at a time like this, but that's the best thing to do here. While the partnership with iClick -- a Chinese digital marketing technology company -- seems to be a step in the right direction for Baozun, it did not justify a 35% jump in the stock, so today's correction seems warranted.

Baozun mostly missed out on the boom in e-commerce stocks last year, but a strong fourth-quarter report could be a catalyst when it comes out in March. Analysts see revenue growing 32.6% and earnings per share increasing from $0.38 to $0.54.

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
$8.08 (5.76%) $0.44
iClick Interactive Asia Group Limited Stock Quote
iClick Interactive Asia Group Limited
ICLK
$0.72 (-1.66%) $0.01

*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 service.

Stock Advisor Returns
345%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

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.