Vipshop Holdings Ltd. (VIPS), a Chinese online fashion retailer, tumbled in New York after Citron Research wrote in a Twitter post that the number of users on the website declined and shares may slump more than 50 percent.
Vipshop traffic “falls off a cliff,” Citron posted on Twitter today, attaching a note from Macquarie Group Ltd., which cited data from iResearch saying users fell 20 percent in June from a month earlier. “Stock should go back to 20’s easy. Scary for shareholders. Major decline,” short-seller Citron said.
American depositary receipts of Guangzhou-based Vipshop plunged 6.8 percent to $45.36 at the close in New York, the biggest retreat since June 20. Trading volume was almost triple the average of the past 90 days.
Vipshop, which sells branded fashion online at discounts, surged 154 percent this year, compared with a 1.8 percent decline on the Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. Deutsche Bank AG cut its recommendation for the stock to hold from buy on May 27, citing intensifying competition in the Internet flash sales market.
“Given the good run Vipshop had this year, investors would sell for profit on any negative news,” Jeff Papp, a senior analyst at Oberweis Asset Management Inc., which manages $700 million of assets, said by phone from Lisle, Illinois. “The monthly traffic growth figure cited by Citron is just one piece of information from a data provider without mentioning the company fundamentals. It’s hard to extrapolate anything from just one-month data which accuracy we aren’t sure about.”
Jeremy Peruski at ICR Inc., Vipshop’s external investor relations manager, couldn’t be reached by phone. Andrew Left, the founder of Citron Research, confirmed the post by phone, adding that he started a short position on Vipshop.
Short sellers sell securities they don’t own to buy them later at a lower price.
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