Why does LightintheBox Holding Co. stock Ltd. have skyrocketed

Why LightintheBox Holding Co. Ltd. Stocks Soared

While we don’t believe in timing the market or panicking about market movements, we do like to keep an eye on big moves – in case they are material to our investment thesis.

What: Shares LightintheBox Holding Co. Ltd. came screaming through the tunnel today, gaining as much as 23% after the online formal wear retailer said it had acquired social commerce company Ador.

So what: Terms of the LightintheBox purchase were not disclosed, but the company said it was a cash transaction. At the very least, a Chinese company’s acquisition of a U.S.-based company appears to add legitimacy to the online retailer and give it access to a valuable new market. As a result of the agreement, Ador’s management team and its employees will work for LightintheBox, representing it in the United States. Ador also sells women’s clothing and advertises itself as an online fashion magazine, so the two companies seem like a good fit.

What now: LightintheBox stock has been a hot commodity since its initial public offering in June 2013, reaching highs north of $22 before falling to nearly $6 a share. Like many Chinese stocks, LightintheBox has been volatile as investors seem unsure how to value the young online retailer. Shares fell after the company reported a surprise third-quarter loss, but analysts expect solid revenue growth of 27% this year, enough to justify a rise in its 44-percent P/E ratio. Chinese stocks are often risky, but many, including another online retailer Vipshop Holdings,have delivered multi-pack returns, so LightintheBox is definitely worth keeping an eye on. To do this, simply add the stock to your watchlist here.

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Article Why LightintheBox Holding Co. Ltd. Popped Stocks originally appeared on Fool.com.

Fool contributor Jeremy Bowman and The Motley Fool have no stake 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 views, but we all believe that considering different insights makes us better investors. The Motley Fool has a disclosure policy.