Investors Still Showing Limited Interest in Sputtering Vipshop

E-commerce prodigy Vipshop is losing its luster, as it has failed to meet investors' expectation for back-to-back quarters.

Author: Ed Newton   

Vipshop (NYSE: VIPS) stock continues in the doldrums following disappointing third-quarter results, leaving the e-commerce company lagging far behind competitors like Alibaba and JD.com. 

The stock suffered a 17 percent drop in November following mixed third-quarter results, with revenues surpassing consensus estimates but earnings missing their target by 1 percent. 

The company's revenue rose 27.6 percent to $2.3 billion, but it posted an anemic 14 cents per share in adjusted earnings, down from 49 cents a year ago. The company, which has customarily beat analyst income targets, has now failed to match expectations for back-to-back quarters. 

Company officials described their recent troubles as a temporary blip, which will receive a solid uptick in the fourth quarter. Officials have said they expect revenue growth during the quarter to climb between 20 and 25 percent. 

Quarterly earnings will be burnished by, among other things, income from China's annual online shop-athon Singles Day, which took place on November 11, Vipshop said. 

However, even with the predicted numbers, Motley Fool analyst Rick Munarriz points out, Vipshop would lag behind its usual pace. 

"Even if it lands at the high end of that [predicted] range, it would be Vipshop's weakest showing as a public company," he wrote. "It would also be the sixth consecutive quarter of decelerating year-over-year revenue growth." 

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Vipshop shares underperformed the e-commerce internet delivery services industry by more 35 percent in the past six months, according to Zacks research. The Guangzhou-based company's stock has lost 31.7 percent of its values as against an industry increase of 4.6 percent. 

Industry leaders have themselves stumbled in recent days. For example, Alibaba's stock was down recently by about 11 percent after reaching an all-time high of almost $192 on Nov. 24. And shares of JD.com, though up about 60 percent year-to-date, have fallen about 1.3 percent in the past month. 

"The sell-off has been fed by disappointing Chinese retail sales, which rose 10.2% from the prior year in November vs. analyst estimates for a 10.3% pop," according to TheStreet.com. 

For those two e-commerce giants, however, there was compensatory good news. For example, Alibaba's total active customers increased a whopping 32 percent, a total of 58.8 million, between mid-2016 and mid-2017. 

Analysts still value Vipshop stock, with 21 of 22 from Marketwatch rating as either BUY or HOLD.


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