Why Dingdong Shares Are Volatile Today
What happened
Shares of Chinese Grocery Delivery Service Ding Dong (DDL 3.05% ) had risen nearly 14% at 10 a.m. ET today before giving back much of those gains and trading slightly on the day at 12:48 p.m. The price action also appears to be tied to what is happening. happening with COVID-19 in China. than other broader market trends.
So what
COVID cases have increased in China, with the city of Shanghai reporting more than 130,000 cases since March 1, but no deaths. Still, the government has locked down citizens to prevent further spread, and other parts of China fear they may be next to face the restrictions.
Image source: Getty Images.
The circumstances, which have made access to food more difficult, could support a company like Dingdong, which delivers grocery orders online.
Still, there are other challenges that are likely to keep the stock low today. On the one hand, Chinese stocks appeared to be trading flat or lower, in general, after new data showed that China’s producer price index (PPI) jumped 8.3% in March on an annual basis. Experts had predicted only a 7.9% increase. Hong Kong’s Hang Seng stock index fell 3% today.
Now what
Chinese stocks trade in very different markets from those in the United States. Regulators can be much tougher in China and take action that can seriously hurt or quickly help stocks, making them more unpredictable.
That said, with COVID lockdowns and inflation, a company like Dingdong might be one of the few companies well positioned to weather this kind of environment. But before investing, due to all the factors I just mentioned, it is very important to do thorough research on the industry and regulators that may impact Dingdong.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.