Why Baozun Stock Gained 19% Last Month

What happened

Actions of Baozun (NASDAQ: BZUN) were climbing last month as the company announced a new strategic partnership and appeared to be getting a short squeeze. Based on data from S&P Global Market Intelligence, the title ended the month of January up 19%.

As you can see from the chart below, the stock climbed on January 26 on the above news before relinquishing some of those gains the next day.

BZUN given by YCharts

So what

On January 26, Baozun, which provides e-commerce services to multinational companies in China, gained 35% when it announced a strategic partnership and investment in iClick, a Chinese online marketing company.

A woman holding a box and picking up the phone.

Image source: Getty Images.

Under the terms of the deal, Baozun will take a 4% stake in iClick, paying $ 17.2 million. The companies also entered into a strategic cooperation framework agreement to develop a “full-cycle closed-loop e-commerce model”. While the move seems like a step in the right direction for Baozun, it was odd that the title jumped so much into the news. It appeared that a short squeeze had also helped boost the stock, as 18% of the float is sold short and trading volume has skyrocketed on the news.

The stock lost some of those gains over the remainder of the week, a sign that Baozun had been overbought.

Now what

Baozun received another boost in the first week of February after announcing that he acquire Full Jet, another specialist in e-commerce services. This decision will help the company consolidate its leadership position in terms of market share in the category and increase its customer base. The share rose 23% in the three sessions after the announcement of the acquisition by Baozun.

The stock is lagging behind its Chinese e-commerce counterparts, but announcements over the past two weeks could help jumpstart the company’s growth and draw investor attention to the stock. Equities always seem well valued, especially when you consider Baozun’s stock. growth prospects.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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