Personal Finance

Why 51job Inc. Stock Dropped 10.3% on Wednesday

Asian stock market prices with red and green arrows indicating direction

What happened

Shares of 51job Inc. (NASDAQ: JOBS) fell 10.3% on Wednesday despite a lack of company-specific news. Rather, 51job's drop came as part of a broader sell-off in Chinese stocks amid concerns over a potential trade war caused by U.S. tariffs on Chinese exports.

Asian stock market prices with red and green arrows indicating direction

Image source: Getty Images.

So what

Any macroeconomic development that could stem China's job market could hurt 51job as the leading online recruiter in the country.

But it also doesn't help that -- even after yesterday's decline -- 51job stock has more than doubled over the past year. Most recently, that rise included a single-day pop of nearly 20% following 51job's strong fourth-quarter report in early March, followed by a nearly 10% gain after its equally impressive first-quarter results in May. Within the latter, 51job surprised investors by marking its seventh straight quarter of accelerating top-line growth; revenue jumped 33.5% year over year to $129.3 million, well above both its guidance and Wall Street's expectations.

Now what

As it stands, 51job won't report earnings again until early August. But you can be sure investors would be delighted if the company manages to accelerate sales growth for the eighth straight time. That might be setting a high bar, however, as its latest guidance leaves room for doubt by suggesting revenue will increase "just" 27% to 31% as measured in Chinese currency.

But keeping in mind that 51job has made a habit of underpromising and overdelivering in recent quarters, I won't be the least bit surprised if it delivers yet another beat. If that happens, yesterday's pullback could prove to be short-lived.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends 51job. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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