Relative Value / Event: Europe fashion internet
LONG ASOS, YOOX / SHORT ZALANDO YOOX IM: Eur 18.14; ASC LN: GBP 24.86; ZAL GR: Eur 23.20 November 26, 2014 Today, Zalando is up 15% as of this writing and is trading for the first time above its October Eur 21.50 IPO price. As a reminder, we had issued a SELL recommendation on Zalando as the shares were IPOed on overvaluation concerns and lack of profitability when compared to competitors Asos and Yoox. Zalando ended being a very disappointing IPO with the shares trading down to Eur 17 a few days following the IPO. The shares are very strong today following an announcement that the company should reach profitability by the end of the year. In addition, Q3 performance was better than expected. Over that time period, Yoox and especially Asos outperformed. We are re-iterating our SELL recommendation on Zalando, the today's price action represents an excellent trading opportunity to set-up a long Yoox, long Asos / short Zalando position. The trade is justified by relative value (not enough trading history for mean reversion analysis). FULL REPORT ATTACHED