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14
Dec
2010

E-Commerce China Dangdang: Buy the dip? (NYSE:DANG)

E-Commerce China Dangdang (NYSE:DANG)

After ending its first week of trading up 105 percent, it’s hard to imagine that there wouldn’t be some profit-taking in E-Commerce China Dangdang (NYSE:DANG). Now, it’ll be interesting to see what stance the real money takes on DANG. Is now the time to buy and hold?

Since launching in 2000, E-Commerce China Dangdang has slowly positioned itself as a sort of Amazon.com, Inc. (NASDAQ:AMZN) of the East. China’s leading online book seller, DANG controls 50 percent of the online market for the $4.6 billion book publishing industry on the mainland. In the first nine months of the year, DANG has brought in $2.4 million in net income, and that growth seems to be accelerating.

Quarterly growth in net sales was up 295% over last year according to the company’s latest earnings release. That’s good enough to make DANG’s business more than twice the size of Amazon.cn – the Chinese version of Amazon.com. Still, investors seemed more than willing to jump ship on DANG today as the stock started declining with the opening bell and kept falling throughout the day.

When it was all said and done, DANG lost more than 11 percent. That doesn’t breed confidence if you bought in on Friday, but investors can take solace in the fact that another Chinese tech stock, Youku.com, Inc. ADS (NYSE:YOKU), fell even further. Something of a Chinese version of YouTube.com, shares in Youku.com plunged nearly 19 percent today after the company’s IPO last Wednesday – the same day of DANG’s IPO.

The choice in the battle between the two stocks (Youku and DangDang) is obvious in my mind: go with the company that’s actually making money right now; not the company that could be making money five years from now. That’s DangDang. And, if you’re willing to ride the roller coaster for a couple years, I don’t expect you’ll be fretting over an 11 percent drop in a single day. Rome, as they say, wasn’t built in a day. Neither was Amazon, and neither will China’s leading online e-commerce site. If DANG proves to be that site, it could be rewarding. Just take a look at Amazon’s chart over the past 13 years, and you’ll see a stock that’s up 10,000 percent. That’s a result I’d be happy with – even if it takes 13 years.

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One Response to E-Commerce China Dangdang: Buy the dip? (NYSE:DANG)

  1. E-Commerce China Dangdang: Buy the dip? (NYSE:DANG) – TradingStocks.me | E-Commerce Center says:
    December 14, 2010 at 10:17 am

    [...] See more here: E-Commerce China Dangdang: Buy the dip? (NYSE:DANG) – TradingStocks.me [...]

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