JD.com (JD) stock slipped early Thursday despite the Chinese e-commerce company reporting better-than-expected third-quarter earnings. Revenue growth accelerated to 5.1%, but still came in just below consensus.
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The Chip War With China Is Heating Up. Who’s Winning?
JD earned an adjusted 8.68 yuan per American depositary share (ADS), or $1.20, on sales of 260.39 billion yuan, or $36 billion, for the September-ended quarter. Analysts polled by FactSet projected the Beijing-based company would post adjusted earnings of 7.57 yuan per ADS on sales of 260.43 yuan. Other consensus estimates placed expectations for JD’s revenue at 261.45 billion yuan.
Sales growth accelerated from Q2’s 1.2% to 5.1%. Third quarter earnings per ADS increased 29.5%.
“We saw an uptick in our topline growth, as well as healthy profitability in the third quarter, as overall consumer sentiment continued to brighten,” JD Chief Executive Sandy Xu said in a news release.
On the stock market today, JD stock is down 4% at 34.25 in recent action.
JD Sees Rebound In Electronics, Appliances
Overall, JD stock is ahead 27% year to date. But shares have bounced around as investors debate how well stimulus efforts from the Chinese government can restart overall economic growth. Donald Trump’s U.S. presidential victory compounds that concern, with the threat of massive new tariffs vs. China.
Shares surged nearly 50% in the month of September but leveled off in October and are down 12% so far in November. Even prior to earnings, JD had tumbled 6.9% this week, dropping below the 50-day and 10-week lines.
Still, the company gave upbeat commentary. Chief Financial Officer Ian Su Shan said in a news release that JD’s revenue growth was helped by “a rebound in growth of electronics and home appliances, and sustained momentum in general merchandise.”
Revenue from JD’s retail business grew 6.1% to 225 billion yuan.
JD is China’s largest e-commerce retailer by overall revenue. As consumer spending has slowed in the country, JD has been battling for market share not just with longtime rival Alibaba (BABA) but also PDD Holdings‘ (PDD) Pinduoduo and the ByteDance-owned Douyin.
JD has focused on offering discounts and promotions to win consumer attention. Earlier this week was the China Singles Day online shopping event, when retailers offer discounts on Nov. 11. Xu said in Thursday’s earnings release that JD’s promotions received “enthusiastic user response.”
JD Stock Technical Ratings
Coming into the report, JD had an IBD Composite Rating of 85 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Further, JD’s IBD Relative Strength Rating was 87 out of 99. The RS Rating means that JD has outperformed 88% of all stocks in IBD’s database over the past 12 months.
JD’s China e-commerce rival Alibaba will report earnings early Friday. Alibaba stock was down 1.6% at 90.48 in recent Thursday trading.
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