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Why Baozun Stock Was Climbing Today

By Jeremy Bowman - Feb 10, 2021 at 4:08PM

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The Chinese e-commerce stock got a lift -- but it was unclear why.

What happened

Shares of Baozun (BZUN 2.36%), the Chinese provider of e-commerce services for multinational companies, was moving higher today, even though there was no apparent news about the company. The gains came as a number of smaller Chinese stocks rose by double digits, including Bilibili and Huya, indicating that investors may be rotating into the sector.

As of 3:08 p.m. EST, Baozun was up 9.8%, while the MSCI China ETF had gained 1.1%, even as the S&P 500 was nearly flat. That may offer further evidence of a rotation into Chinese stocks, although there was no specific market-moving news out of China.

The world Baozun spelled out with the company's logos.

Image source: Baozun.

So what

Baozun shares have been surging recently as the company announced two significant deals in back-to-back weeks. First came a strategic partnership with iClick, a Chinese online marketing company, which also included Baozun's taking a small equity investment in the company. Last week, the company followed that up by acquiring Full Jet, a peer in e-commerce services that will give it better access to the luxury market. 

After years of middling results, Baozun, which has long seemed undervalued, may be getting "rerated" by the market -- the company is earning a higher valuation because of those forward-looking moves. Baozun may also be benefiting from a short squeeze, as nearly 20% of the stock's float is sold short.

Now what

If there was a reason for Chinese stocks' outperformance today, it may be because of anticipation for the Chinese new year holiday this Friday. This tends to be a major sales driver for e-commerce companies, which largely benefitted from the pandemic.

As for Baozun, the stock is now up more than 60% year to date. That's a big move on relatively little news, but the stock may be making up for missing out on the e-commerce rally last year, even though its growth was solid.

Looking ahead, the company's next earnings report is due out in March. Analysts are expecting 32% revenue growth in the fourth quarter to $526.2 million, and a rise in earnings per share from $0.38 to $0.50.

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Stocks Mentioned

Baozun Stock Quote
Baozun
BZUN
$7.82 (2.36%) $0.18
HUYA Stock Quote
HUYA
HUYA
$3.91 (0.51%) $0.02
iClick Interactive Asia Group Limited Stock Quote
iClick Interactive Asia Group Limited
ICLK
$0.79 (7.43%) $0.05
Bilibili Stock Quote
Bilibili
BILI
$20.63 (0.15%) $0.03
iShares Trust - iShares MSCI China ETF Stock Quote
iShares Trust - iShares MSCI China ETF
MCHI
$48.23 (-0.19%) $0.09

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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