What happened
Shares of the Chinese grocery delivery service Dingdong (DDL 1.47%) had risen nearly 14% as of 10 a.m. ET today before giving back much of those gains and trading slight up on the day as of 12:48 p.m. The price action appears to be related to what's going on with COVID-19 in China as well as other broader market trends.
So what
COVID cases have been rising in China, with the City of Shanghai reporting more than 130,000 cases since March 1, although no deaths. Still, the government has citizens locked down to prevent further spread, and other regions of China fear they could be next to face the restrictions.
Image source: Getty Images.
The circumstances, which have made accessing food more difficult, might support a business like Dingdong, which delivers grocery orders made online.
NYSE: DDL
Key Data Points
Still, there are other challenges likely keeping the stock down today. For one, Chinese stocks seemed to trade flat or down, in general, after new data showed that China's Producer Price Index (PPI) had jumped 8.3% in March on a year-over-year basis. Experts had predicted only an increase of 7.9%. Hong Kong's Hang Seng stock market index fell 3% today.
Now what
Chinese stocks trade on markets that are very different from those in the U.S. Regulators can be much harsher in China and take action that can severely harm or help stocks quickly, making them more unpredictable.
That said, with COVID lockdowns and inflation, a company like Dingdong might be one of the few companies well positioned to take on this kind of environment. But before investing, due to all the factors I just mentioned, it's very important to thoroughly research the industry and regulators that may impact Dingdong.
