Why JD.com Stock Was Sliding Today
What happened
Shares of JD.com (NASDAQ: JD) were falling today after the Chinese e-commerce company issued a second-quarter earnings report that beat estimates, but broader fears about China weighed on the stock.
As of 11:58 a.m. ET on Wednesday, the stock was down 3.2%.
So what
JD, which is China's biggest direct online retailer, said that revenue in the quarter rose 7.6% to $39.7 billion, which topped estimates at $38.71 billion. Service revenue, which includes its third-party marketplace and logistics businesses, was up 30.1% to $7.5 billion.
Sales growth was driven in part by electronics and home appliances, while sales of general merchandise, including groceries, fell.
Adjusted operating income rose by 50% to $1.2 billion, and operating income in its new businesses, like JD Property and overseas businesses, turned positive with the help of a gain on the sale of development properties.
On the bottom line, adjusted earnings per share rose 33% to $0.74, which topped the analyst consensus at $0.66.
CEO Sandy Xu said, "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, one of our priorities to provide customers with enriched supplies at better prices."
Now what
JD doesn't provide guidance, but second-quarter revenue growth accelerated from the first quarter, a sign that the worst of the headwinds in China, including the tech crackdown, zero-Covid policy, and the economic slowdown, could be over.
Last week, Alibaba also posted accelerating revenue growth in its second-quarter report as well.
But economic data out of China continues to be weak, meaning growth could remain sluggish for JD as well. While the company still has a lot of growth potential, it's ultimately subject to the health of the Chinese economy, and that's still a primary investor concern.
10 stocks we like better than JD.com
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and JD.com wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of August 14, 2023
Jeremy Bowman has positions in Alibaba Group and JD.com. The Motley Fool has positions in and recommends JD.com. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
