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Why GDS Holdings Stock Fell on Friday

By Daniel Sparks – Updated Aug 27, 2021 at 3:55PM

Key Points

  • Bullishness for Chinese tech stocks earlier this week seems to have waned.
  • GDS stock has plummeted more than 30% over the past three months.
  • The data center specialist's revenue is growing rapidly.

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Chinese tech stocks have had a tough few months, and GDS Holdings has been no exception to this bearish trend.

What happened

Shares of Shanghai-based data center specialist GDS Holdings (GDS 2.30%) tumbled on Friday, declining as much as 13.4%. As of 2:50 p.m. EDT, however, the stock was down 9%.

The tech stock's decline on Friday extends a bearish trend for the stock as pressure on Chinese stocks persists.

A chalkboard sketch of a chart showing a stock price declining.

Image source: Getty Images.

So what

Chinese tech stocks have been battered and bruised in recent months, though they made an attempt at a comeback earlier this week when news broke that famed investor Cathie Wood was buying shares of Chinese tech company JD.com (JD 1.98%). Worries late this week about a slowdown in the real estate market in China, however, snapped a three-day winning streak for China tech stocks. GDS Holdings appears to be getting beat up along with other China tech stocks. E-commerce companies Alibaba Group Holding (BABA 1.03%) and JD.com were both down on Friday, despite the Nasdaq Composite rising more than 1 percent.

Shares of GDS have fallen a total of 31% over the past three months.

Now what

GDS recently announced that second-quarter revenue grew 38.9% year over year. In addition, the company expressed optimism about its expansion plans in Southeast Asia, where it says it believes it is building a foundation to capture "incremental growth opportunities in one of the world's fastest developing digital regions." 

Despite this business momentum, recent events in China are a reminder that investors need to carefully consider the risks of investing in highly regulated markets like China.

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Alibaba Group Holding Ltd. and JD.com. The Motley Fool has a disclosure policy.

Stocks Mentioned

Gds Stock Quote
Gds
GDS
$18.22 (2.30%) $0.41
JD.com Stock Quote
JD.com
JD
$60.35 (1.98%) $1.17
Alibaba Group Stock Quote
Alibaba Group
BABA
$91.45 (1.03%) $0.93

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

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