It was a great week for investors in many of China's publicly traded e-commerce companies. Several of the country's growth darlings came through with double-digit percentage gains as investors flocked back into Chinese equities that specialize in retail transactions. Let's check out some of the shining stars that came through with big moves last week.
| Company | June 27 | Weekly Gain |
|---|---|---|
| LightInTheBox (LITB -3.23%) | $6.42 | 27% |
| 58.com (WUBA) | $54.90 | 25% |
| Dangdang (DANG) | $12.83 | 14% |
| JD.com (JD 2.61%) | $28.01 | 10% |
Source: Barron's.
Let's start with LightInTheBox. The China-based online retailer surged on Friday after boosting its top-line guidance. It now sees revenue for the quarter ending today clocking in between $86 million and $88 million, up 19% to 22% from the prior year's second quarter. This is just a $2 million increase, so why did it result in a $65 million pop in LightInTheBox's market cap? Well, since LightInTheBox went public last year it has done nothing but disappoint investors. This is the first time in its brief exchange-traded tenure that it has boosted its outlook.
LightInTheBox sells a wide range of dresses and home fixtures, but it sells primarily outside of China. Europe accounts for more than half of its sales. An improving top-line outlook is the first encouraging sign that investors have seen in a long time.
58.com popped after dot-com giant Tencent announced a nearly 20% stake in the online marketplace. 58.com is called the Craigslist of China by some, given the similarities. But when you pair Tencent's 20% chunk of 58.com with its recent purchase of a 15% stake in JD.com back in March, you have a company telegraphing its clear intent to play a more prominent role in e-commerce in China.
JD.com accounts for nearly half of China's B2C, or business to consumer, market. It serves 47.4 million active customer accounts, with revenue soaring 68% to $1.5 billion last year. Between its minority stakes in JD.com and 58.com, Tencent is now a difference maker in e-tail. JD.com's shares rose 10% on the week.
Given all of the buzz surrounding Chinese e-commerce -- whether it's Tencent snapping up a minority stake in 58.com or LightInTheBox boosting its guidance -- it probably isn't a surprise to see Dangdang go along for the ride. Dangdang was the first pure play on China's booming e-tail market to hit a stateside exchange. It originally sold books, but it has now expanded to cover a broader spectrum of general merchandise.
The gains are naturally welcome, but given the volatility that we've experienced over the past few years when it comes to China's leading Internet companies, it's a safe bet that the wild swings will continue in the near term.
