What happened
Baozun (BZUN 3.14%) stockholders are seeing red today, to the tune of 16.2% as of 2 p.m. ET Thursday. Shares of China's e-commerce outfit plunged in response to its decline in revenue for the three-month stretch ending in December.
So what
While most companies are still climbing their way out of pandemic-driven lulls, Baozun is running into a headwind. The e-commerce solutions provider generated $497.9 million in sales for its final quarter of fiscal 2021, down 5.2% on a year-over-year basis. CEO Vincent Qiu explained during the quarterly earnings call that "a weak consumption sentiment and constrictive government policies persist for China's e-commerce" in the wake of the coronavirus contagion.
Image source: Getty Images.
The headwind is taking an even bigger toll on profits. Operational income was pared back to practically nil last quarter, versus operating margin rates of 9% for the comparable quarter a year earlier.
Now what
Overzealous selling is often a buying opportunity. But this may not be one of those times. Today's drubbing only extends what's become an 82% rout for Baozun shares over the course of the past twelve months as many of China's tech companies are contending with new regulations in addition to navigating the post-pandemic consumer environment.
While it's possible today's steep selling marks the absolute bottom for this stock's long-lived weakness, there's far too much risk here and far too little evidence that Baozun will be able to turn its business around anytime soon.
