JD.com
smashed earnings expectations but the e-commerce giant’s stock was tumbling on Wednesday, a reflection of gloom across Chinese markets amid worries over a slowdown in the world’s second-largest economy.
JD.com
(ticker: JD) reported per-share earnings of 5.39 Chinese yuan (74 cents) on revenue of 287.9 billion yuan ($39.5 billion) in the second quarter. Representing earnings and sales up 33% and 8% year-over-year, respectively, the results firmly outpaced expectations among analysts surveyed by FactSet of per-share profit at 4.95 yuan and revenue at $280 billion yuan.
“We reported a solid performance for the second quarter both financially and operationally,” said Sandy Xu, JD.com’s CEO. “We are also encouraged to see the number of our marketplace merchants more than doubled and reached a new record during the quarter, reflecting our efforts to build a superior marketplace ecosystem.”
The U.S.-listed shares of JD.com fell 5.3% in premarket trading as investors failed to get excited by results that were, on the face of it, very strong, with solid earnings and revenue growth from the first quarter amid a tough operating environment. Weakness in JD.com stock matches the trend across peers, with shares in e-commerce rival
Alibaba
(BABA) down 2.1%.
The problem for JD.com—just like Alibaba, which reported results last week—is the macroeconomic environment, and the fact that the company did not include forward guidance in its earnings release (which is typical).
China faces a significant slowdown, with a spate of economic data releases in recent months pointing to a grim decline in consumption, which is a trend that has a direct bearing on companies like JD.com. Investor response to stimulus has been muted. While JD.com’s operating efficiency should be rewarded—expenses are trending toward a smaller percentage of revenue—not even that can buck big-picture trends.
Write to Jack Denton at [email protected]
Read the full article here
