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Why Shares of E Commerce China Dangdang Inc. Surged

By Jeremy Bowman – Feb 27, 2014 at 4:38PM

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Is this meaningful? Or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of E Commerce China Dangdang Inc. (DANG) soared today, gaining as much as 27% after a blowout earnings report.

So what: The Chinese online retailer posted a profit of $0.04 a share, better than expectations of a loss of $0.07, while revenue jumped 22% to $325.7 million against estimates of $317.7 million. Gross margin jumped 420 points to 17.6% as Executive Chairwoman Peggy Yu Yu said the quarter reflects the company's "solid execution of our strategies to transform Dangdang from an online bookstore into an integrated online shopping mall targeting mid-to-high-end consumers."  

Now what: Dangdang's outlook was strong, as its first-quarter sales projection of $282.95 million was well ahead of estimates of $256.51 million. Dangdang shares are up over 200% over the past year, and seem to be a riding a wave lifting Chinese e-commerce stocks including Vipshop Holdings, which is up more than 300% in that span of time. Considering its strong growth rate, upside guidance, and expanding Chinese economy, which should provide a long run of sales growth ahead, I'd expect the stock to continue to move higher.   

Jeremy Bowman and The Motley Fool have no position in any of the stocks mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

E-Commerce China Dangdang Inc. Stock Quote
E-Commerce China Dangdang Inc.
DANG

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