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) 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?
Before you buy stock in JD.com, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and JD.com wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of December 11, 2023
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.
