E-Commerce China DangDang Inc. (DANG) is a leading online retailer in China. Many view this company to be the Amazon.com (AMZN) of China as they sell a wide variety of products. This company has been growing extremely fast, and analysts expect revenues to grow from $558 million in 2011 to about $881 million in 2012.
DangDang also has an extremely strong balance sheet, with no long-term debt and about $245 million in cash. The company has an excellent management team that appears to be following much of Amazon.com's very successful trajectory. Recently, DangDang announced plans to offer a e-book reader, and it also offers many other products that has made Amazon.com a retailing giant. When you see the potential that Internet retailing has and combine it with the huge population base and rising incomes in China, DangDang has the potential to make many millionaires out of buy and hold investors. This stock has rebounded from ridiculously low levels, caused in part by tax-loss selling last month. However, it is still trading for about half the December 2010, initial public offering price of $16, and for about a quarter of the 52 week high, so plenty of upside remains. The hugely successful Tiger Global Fund is the largest shareholder of this company, and they have made fortunes buying Internet stocks in the past. Dangdang has a market capitalization of about $661 million. By comparison, Amazon.com has a market capitalization of about $89 billion. If DangDang achieves that valuation, the stock would trade for about $113 per share someday.
Here are some key points for DANG: Current share price: $8.34. The 52 week range is $4.11 to $30.35 Earnings estimates for 2011: a loss of 35 cents per share. Earnings estimates for 2012: a loss of 53 cents per share.
How does $113 per share reach a market cap of $89 billion like Amazon?? At 79 million shares O/S, a DANG share price of $113 gives it a market cap of $8.9 billion. In order for DANG to achieve the same valuation of Amazon, its share price would have to go up to $1126 per share. It would have to perform like BIDU (Baidu) where its share price went straight to $1300 per share before a 10-1 stock split, now trading around $130/share.