Why Zulily Inc. Stock Tumbled
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 Zulily Inc. were getting torn apart today, falling as much as 10% and finishing down 7% on a momentum-sell off that swept the market.
So what: There was no major news pushing shares of the mom-focused online retailer down today as the Nasdaq fell 1.4% and the small-cap Russell 2000 index also dropped 1.2% on a broad sell-off. Other big names to fall for no good reason included Twitter, which slid 7%, and Yelp, which also lost 7%. Concerns that stocks may be overvalued as earnings season kicks off seemed to drive today's sell-off, and momentum stocks have been particularly volatile over the past few months.
Now what: Zulily shareholders are no stranger to wild swings at this point. After debuting at $22 a share in November, the stock rocketed as high as $73 in February on a blowout earnings report. Since then, the share price has returned back to earth, falling in May after missing expectations in a follow-up quarterly report. Expectations for Zulily are high, and the company is posting incredible top-line growth numbers, with sales expected to jump 72% this year alone. Still, it will be a while before profits can justify the $34 share price it trades at today. I'd encourage investors to ignore today's momentum-based drop, but this highflier could easily see more disappointing days if near-term results come up short.
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The article Why Zulily Inc. Stock Tumbled originally appeared on Fool.com.Jeremy Bowman and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.
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