As I wrote in mid May after E-Commerce Dangdang’s (DANG) first earnings report, people were paying up for growth not profits. Now that “risk is off”, it appears people are not willing to pay for even the revenue growth. The stock is down 14% alone today and in 7 trading sessions, over 40%..
This is an example of catching a falling knife – one would have thought coming into the day, a stock down nearly 30% in six sessions would be ready for an oversold bounce. One would have lost a finger or two. As I said with RENN last week, some of these names are falling so dramatically they are actually going to be interesting from the long side. But finding the right entry point is not easy.
We’ll mark this down as another ‘success’ for Wall Street – an overbloated, overpriced stock that institutions were able to flip to retail, and leave the scene of the crime. Peggy Yu Yu might not be a billionaire anymore after this past week.