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China-Based JD.com (JD) up 5% After Strong Q2 Earnings
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Shares of JD.com (JD - Free Report) were up over 5% in midday trading Wednesday after posting earnings that were stronger than expected.
Based in Beijing, China, JD operates in the e-commerce space and offers products such as apparel, technology, accessories, cosmetics, books, and music, amongst others. The company announced earnings before market open, in which it posted -$0.03 in earnings per share and revenue of $9,816 million, beating our estimates of -$0.07 and $9,810 million respectively.
JD’s revenue growth represents a 42% year-over-year increase, while its annual active customer account number of 188.1 million represents a 65% year-over-year increase.
JD CEO Richard Liu stated that “With our reputation for high-quality online shopping and same-day delivery already cemented with Chinese consumers, we are taking steps to further extend that advantage through efforts like our new strategic alliance with Wal-Mart and Chinese online supermarket Yihaodian. We are successfully pursuing our vision of providing a superior, all-categories e-commerce platform through partnerships with top brands and investments in cutting-edge technologies that extend our lead in fulfillment and overall user experience.”
The company also saw a 46% year-over-year increase in Gross Merchandise Volume (GMV), an important metric for e-commerce services. The company’s GMV is still smaller than Alibaba (BABA - Free Report) , which has the highest in the country. However, BABA has seen trouble due to the listing of many fake goods on the service, an issue that JD is reputed for not having.
As we have previously discussed, China’s rapid economic development has led to the rise of a massive middle class. Chinese people now have increased disposable income, which is poised to become the major catalyst for the nation’s economic growth moving forward. Companies like JD are in position to capitalize on this shift in consumer behavior, and have also developed other initiatives through which to expand.
In June, JD announced a partnership with Wal-Mart (WMT - Free Report) , in which it will buy Wal-Mart’s Chinese e-commerce subsidiary Yihaodian in return for a 5% stake in JD. The company also expanded its partnership with Lenovo to become its preferred platform for new products. These initiatives, coupled with a growing catalog and newfound membership in the Fortune 500 reflects positive outlook for JD moving forward.
In response to JD’s strong earnings performance, BABA is up over 2% in midday trading. It will report earnings on August 11 before market open.
Due to downward earnings estimate revisions, JD currently sits at a Zacks Rank #4 (Sell). Although the company is doing much to expand, shares are down 30% year-to-date. The company issued guidance in a range lower than their earnings, representing concerns over the growingly saturated Chinese e-commerce sector.
Although JD is on the right track, investors should keep a watchful eye on upcoming developments, given that it still has plenty of hurdles ahead.
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China-Based JD.com (JD) up 5% After Strong Q2 Earnings
Shares of JD.com (JD - Free Report) were up over 5% in midday trading Wednesday after posting earnings that were stronger than expected.
Based in Beijing, China, JD operates in the e-commerce space and offers products such as apparel, technology, accessories, cosmetics, books, and music, amongst others. The company announced earnings before market open, in which it posted -$0.03 in earnings per share and revenue of $9,816 million, beating our estimates of -$0.07 and $9,810 million respectively.
JD’s revenue growth represents a 42% year-over-year increase, while its annual active customer account number of 188.1 million represents a 65% year-over-year increase.
JD CEO Richard Liu stated that “With our reputation for high-quality online shopping and same-day delivery already cemented with Chinese consumers, we are taking steps to further extend that advantage through efforts like our new strategic alliance with Wal-Mart and Chinese online supermarket Yihaodian. We are successfully pursuing our vision of providing a superior, all-categories e-commerce platform through partnerships with top brands and investments in cutting-edge technologies that extend our lead in fulfillment and overall user experience.”
The company also saw a 46% year-over-year increase in Gross Merchandise Volume (GMV), an important metric for e-commerce services. The company’s GMV is still smaller than Alibaba (BABA - Free Report) , which has the highest in the country. However, BABA has seen trouble due to the listing of many fake goods on the service, an issue that JD is reputed for not having.
As we have previously discussed, China’s rapid economic development has led to the rise of a massive middle class. Chinese people now have increased disposable income, which is poised to become the major catalyst for the nation’s economic growth moving forward. Companies like JD are in position to capitalize on this shift in consumer behavior, and have also developed other initiatives through which to expand.
In June, JD announced a partnership with Wal-Mart (WMT - Free Report) , in which it will buy Wal-Mart’s Chinese e-commerce subsidiary Yihaodian in return for a 5% stake in JD. The company also expanded its partnership with Lenovo to become its preferred platform for new products. These initiatives, coupled with a growing catalog and newfound membership in the Fortune 500 reflects positive outlook for JD moving forward.
In response to JD’s strong earnings performance, BABA is up over 2% in midday trading. It will report earnings on August 11 before market open.
Due to downward earnings estimate revisions, JD currently sits at a Zacks Rank #4 (Sell). Although the company is doing much to expand, shares are down 30% year-to-date. The company issued guidance in a range lower than their earnings, representing concerns over the growingly saturated Chinese e-commerce sector.
Although JD is on the right track, investors should keep a watchful eye on upcoming developments, given that it still has plenty of hurdles ahead.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>