NEW YORK (TheStreet) -- Shares of Vipshop Holdings  (VIPS - Get Report) rose 3.39% to $26.66 in morning trading Wednesday after the Chinese online discount retailer responded to allegations by some short sellers.

The allegations concern Vipshop's method of revenue recognition, inventory accounting, capital expenditures, cash flow, and more. But Vipshop issued a response Wednesday morning to categorically deny all allegations.

"Vipshop believes these allegations are unfounded and contain numerous errors, unsupported speculation, and a general misunderstanding of the company's business model," the company said in a statement. "The company has made its board of directors and its independent auditors aware of the reports, and will continue to review and address the allegations as appropriate."

Vipshop will release its first-quarter earnings after the market close today.

More than 15.1 million shares had changed hands as of 10:56 a.m., compared to the daily average volume of 6,057,120.

Separately, TheStreet Ratings team rates VIPSHOP HOLDINGS LTD -ADR as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate VIPSHOP HOLDINGS LTD -ADR (VIPS) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, impressive record of earnings per share growth, compelling growth in net income and solid stock price performance. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • VIPS's very impressive revenue growth greatly exceeded the industry average of 19.4%. Since the same quarter one year prior, revenues leaped by 108.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • VIPSHOP HOLDINGS LTD -ADR reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, VIPSHOP HOLDINGS LTD -ADR increased its bottom line by earning $0.23 versus $0.09 in the prior year. This year, the market expects an improvement in earnings ($0.54 versus $0.23).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet & Catalog Retail industry. The net income increased by 122.8% when compared to the same quarter one year prior, rising from $25.40 million to $56.58 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet & Catalog Retail industry and the overall market, VIPSHOP HOLDINGS LTD -ADR's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Powered by its strong earnings growth of 109.30% and other important driving factors, this stock has surged by 98.11% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: VIPS Ratings Report