Why LightintheBox Holding Co. Ltd. Shares Popped
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 LightintheBox Holding Co. Ltd. were screaming through the end of the tunnel today, gaining as much as 23% after the online formalwear retailer said it acquired Ador, a social e-commerce company.
So what: Terms were not disclosed for LightintheBox's purchase, but the company said it was an all-cash deal. At a minimum, the Chinese company's acquisition of a U.S.-based business would seem to add legitimacy to the online vendor and gives it access to a valuable new market. As a result of the agreement, the Ador executive team and its employees will come work for LightintheBox, representing it in the United States. Ador also sells women's clothes and advertises itself as an online shoppable fashion magazine, so the two seem to be a good fit.
Now what: LightintheBox shares have been all over the place since their June 2013 IPO, climbing to a high north of $22 before cratering at near $6 a share. Like many Chinese stocks, LightintheBox is volatile, as investors seem unsure how to assess the young online retailer. Shares tanked when the company posted a surprise third-quarter loss, but analysts are expecting a robust 27% top-line growth this year, which seems to be enough to justify a forward P/E of 44. Chinese stocks are often risky, but many, including fellow online retailer Vipshop Holdings,have delivered multi-bagging returns, so it's definitely worth keeping your eye on LightintheBox. To do so, just add the stock to your Watchlist here.
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The article Why LightintheBox Holding Co. Ltd. Shares Popped originally appeared on Fool.com.
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