JD

Why JD.com Stock Shot Higher Today

JD.com (NASDAQ: JD) stock saw significant gains in Friday's trading. The e-commerce company's share price closed out the session up 4.5%, according to data from S&P Global Market Intelligence.

The Chinese government initiated new stimulus measures today. The move helped send the country's tech stocks higher in the daily session, and JD.com participated in the rally.

China takes major new stimulus steps

China's central banking authority announced today that it had issued a new round of loans to help stimulate the country's property sector and broader economy. The $112 billion one-year loan package is a new stimulus record for the country, and was also paired with a policy to reduce the size of down payments needed to buy homes.

China has seen a relatively sluggish economic recovery, as the country has emerged from pandemic-related lockdowns and other headwinds, and investors have been waiting to see if significant stimulus initiatives will be initiated to help kick-start stronger growth. While the country's central bank continues to hold off on stimulus initiatives to bolster the consumer economy, investors were clearly happy about the initiative.

Is JD.com stock cheap right now?

Even with today's gains, JD.com stock is still down roughly 51% across 2023's trading. The e-commerce specialist's share price is all off roughly 74% from its high. On the heels of big sell-offs, the company is valued at very low price-to-earnings and price-to-sales multiples.

JD PE Ratio (Forward) Chart

JD PE Ratio (Forward) data by YCharts

Trading at roughly 9 times this year's expected earnings and less than 29% of this year's expected sales, JD.com continues to look quite cheaply valued by some metrics. The stock has rebound potential at current prices and could go on to be a big winner for risk-tolerant investors.

On the other hand, the company's share price will likely continue to move in conjunction with developments that shape China's broader economic and geopolitical picture. While JD.com could eventually go on to deliver big returns, investors should approach the stock with the understanding that factors beyond the company's business performance will likely continue to shape the trajectory of its share price.

Should you invest $1,000 in JD.com right now?

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JD.com. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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