Shares of China’s JD.com (JD - Free Report) slid more than 2.2% in pre-market trading Monday after the company reported its second-quarter earnings results. Despite impressive revenue growth, JD looks to be getting punished for increased spending and a wider net loss.
In the second quarter, China’s second-largest e-commerce firm reported revenue of 93.2 billion yuan ($13.98 billion), which marked growth of nearly 44% year-over-year and cruised past our consensus estimate of $13.14 billion.
However, the country’s only major rival to Alibaba (BABA - Free Report) reported net loss attributable to shareholders of 496.4 million yuan ($74.43 million), up significantly from 252.3 million yuan in the prior-year period.
JD’s loss widened on the back of higher marketing expenses, which climbed 63% to 4.1 billion yuan—primarily due to sales events in the month of June.
These results come at an integral moment for the company as JD looks to simultaneously expand into Southeast Asia and fend off competition at home. Management is planning to begin direct sales in Thailand by the end of the year, and the company recently expanded its partnership with Walmart (WMT - Free Report) to include more same-day delivery options.
JD now expects third-quarter revenue to fall in the range of 81.8 billion yuan ($12.27 billion) to 84.2 billion yuan ($12.63 billion). These figures would represent year-over-year growth of 36-40% and are well ahead of our current consensus estimate of $11.76 billion.
The company also detailed the recent spin-off of its JD Finance subsidiary—a move that analysts expect will help improve its operating margin in the long run. JD Finance is now a fully Chinese-owned entity, which should give it better regulatory flexibility.
For now, JD remains a Zacks Rank #3 (Hold) and sports “A” grades for Growth and VGM in our Style Scores system. Rival Alibaba, a Zacks Rank #2 (Buy) stock, is expected to report its latest quarterly results on Thursday.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Shares of China’s JD.com (JD - Free Report) slid more than 2.2% in pre-market trading Monday after the company reported its second-quarter earnings results. Despite impressive revenue growth, JD looks to be getting punished for increased spending and a wider net loss.
In the second quarter, China’s second-largest e-commerce firm reported revenue of 93.2 billion yuan ($13.98 billion), which marked growth of nearly 44% year-over-year and cruised past our consensus estimate of $13.14 billion.
However, the country’s only major rival to Alibaba (BABA - Free Report) reported net loss attributable to shareholders of 496.4 million yuan ($74.43 million), up significantly from 252.3 million yuan in the prior-year period.
JD’s loss widened on the back of higher marketing expenses, which climbed 63% to 4.1 billion yuan—primarily due to sales events in the month of June.
These results come at an integral moment for the company as JD looks to simultaneously expand into Southeast Asia and fend off competition at home. Management is planning to begin direct sales in Thailand by the end of the year, and the company recently expanded its partnership with Walmart (WMT - Free Report) to include more same-day delivery options.
JD now expects third-quarter revenue to fall in the range of 81.8 billion yuan ($12.27 billion) to 84.2 billion yuan ($12.63 billion). These figures would represent year-over-year growth of 36-40% and are well ahead of our current consensus estimate of $11.76 billion.
The company also detailed the recent spin-off of its JD Finance subsidiary—a move that analysts expect will help improve its operating margin in the long run. JD Finance is now a fully Chinese-owned entity, which should give it better regulatory flexibility.
For now, JD remains a Zacks Rank #3 (Hold) and sports “A” grades for Growth and VGM in our Style Scores system. Rival Alibaba, a Zacks Rank #2 (Buy) stock, is expected to report its latest quarterly results on Thursday.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on WMT - FREE
Get the latest research report on JD - FREE
Get the latest research report on BABA - FREE