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Why Shares of E Commerce China Dangdang Inc Jumped Again

By Jeremy Bowman – Feb 28, 2014 at 3:45PM

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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) were surging for the second straight day today, gaining as much as 14% following Thursday's blowout earnings report.  

So what: Investors apparently couldn't get enough of the Chinese online retailer yesterday as the stock soared throughout Thursday's session, and immediately jumped out to double-digit gains today. In its earnings report, Dangdang posted a surprise profit of $0.07 a share on a expectations of a $0.04 loss, while revenues increased 22.1% to $325.7 million, better than expectations of $317.7 million. 

Now what: There's clearly a lot of potential in online retail in a fast-growing economy with more than 1 billion consumers, as demonstrated by the explosive growth of stocks like Dangdang and Vipshop Holdings. Even at home, share of flash-sale retailer Zulily jumped more than 50% this week on its own blockbuster earnings. Like Amazon.com, Dangdang has transformed itself from an online bookstore to an all-in-one retailer, a transition that seems to be paying off based on this latest report. For 2014, analysts had been expecting a $0.06-per-share loss, but I'd expect those numbers to get a solid bump given this report and the company's upside first-quarter guidance of 30% revenue growth.

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com. We Fools may not 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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