Investors are Shorting These 5 Chinese Stocks

2. Baozun Inc. (NASDAQ:BZUN)

Number of Hedge Fund Holders: 12

Float Shorted: 6.39%

Baozun Inc. (NASDAQ:BZUN) is a Shanghai, China-based e-commerce solutions provider. The company is heavily reliant on Taobao, which is an e-commerce marketplace owned by Alibaba Group Holding Limited (NYSE:BABA).

As of July 14, 4.32 million shares of Baozun Inc. (NASDAQ:BZUN) were sold short, equivalent to 8.05% of the total shares outstanding. It would take 5.48 days to cover the short positions based on the current average daily trading volume of 789,000 shares.

The e-commerce solutions provider is facing backlash from notable western brands due to the human rights violations reported in Xinjiang. Baozun Inc. (NASDAQ:BZUN) is a Better Cotton Initiative (BCI) member firm. BCI had to cease operations in Xinjiang due to labor abuses-related concerns, as Chinese nationalists initiated a campaign against brands that supported or had ties with BCI. The boycott caused a significant dip in Baozun Inc. (NASDAQ:BZUN)’s sales because of the company’s gross merchandise value-based pricing model.

Investors believe Baozun Inc. (NASDAQ:BZUN) is trading at a premium to its earnings growth. With the loss of sales and its high execution risk, Baozun Inc.’s (NASDAQ:BZUN) stock price is expected to decline further.