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Why Baozun Stock Gained 19% Last Month

By Jeremy Bowman - Feb 5, 2021 at 8:47PM

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A strategic partnership and a short squeeze lifted the stock in January.

What happened

Shares of Baozun (BZUN 1.54%) were climbing last month as the company announced a new strategic partnership and seemed to benefit from a short squeeze. According to data from S&P Global Market Intelligence, the stock finished January up 19%.

As you can see from the chart below, the stock shot higher on Jan. 26 on the news above before giving back some of those gains the next day.

BZUN Chart

BZUN data by YCharts

So what

On Jan. 26, Baozun, which provides e-commerce services to multinational companies in China, gained 35% as it announced a strategic partnership and investment in iClick, a Chinese online marketing company.

A woman holding a box and taking on the phone.

Image source: Getty Images.

According to the terms of the deal, Baozun will take a 4% stake in iClick, paying $17.2 million. The companies also entered into a strategic cooperation framework agreement to develop a "full-cycle, closed-loop e-commerce model." While the move seems to be a step in the right direction for Baozun, it was strange for the stock to jump so much on the news. It seemed like a short squeeze also helped pump up the stock, as 18% of the float is sold short and trading volume spiked on the news.

The stock gave back some of those gains over the rest of the week, a sign that Baozun had been overbought.

Now what

Baozun got another boost in the first week of February after it said it would acquire Full Jet, another e-commerce services specialist. That move will help the company consolidate its market-share leadership in the category and increase its customer base. The stock rose 23% over the three sessions after Baozun announced the acquisition.

The stock has trailed its Chinese e-commerce peers, but the announcements in the last two weeks could help jump-start the company's growth and attract investor attention to the stock. Shares still look well-priced, especially considering Baozun's growth prospects.

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