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JD.com Stock Continued Its Downward Spiral on September 24

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JD.com stock declined 7.5% yesterday

China-based (FXI) Internet giant JD.com (JD) saw its stock fall 7.5% on September 24 and closed trading at $24.51. JD.com lost ~$2.7 billion in market value on the day. The stock is currently trading 0.5% above its 52-week low of $24.38 and 52.0% below its 52-week high of $50.68. The stock has lost 41.0% year-to-date and 22.0% in September.

Chinese stocks Alibaba (BABA), Sina (SINA), and Baidu (BIDU) have fallen 5.4%, 32.0%, and 3.0%, respectively, in 2018.

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Why is JD.com trading close to its 52-week low?

JD.com stock has been declining throughout 2018, primarily impacted by the ongoing trade war between the United States and China. According to a September 24 report, the company’s founder and CEO, Richard Liu, was embroiled in controversy on August 31.

According to the Reuters report, “Liu, the founder of Chinese ecommerce giant JD.com Inc, was arrested later that day on suspicion of rape, according to a police report. He was released without being charged and has denied any wrongdoing through a lawyer. He has since returned to China and has pledged to cooperate with Minneapolis police.”

The Reuters report added, “Liu holds nearly 80 percent of the voting rights in JD.com. Shares in the company have fallen about 15 percent since Liu’s arrest and are down about 36 percent for the year.”

On September 24, MKM analyst Rob Sanderson lowered his price target on JD.com to $41.00 from $51.00. Sanderson, however, reiterated a “buy” rating for JD.com. The analyst explained, “The core retail business is seeing some headwind on slow appliance sales but is otherwise solid.” Sanderson continued, “Expectations for JD Logistics remain unchanged amidst triple-digit growth and a heavy investment cycle.”

Analysts’ estimates

Of the 37 analysts covering JD.com, 32 recommend a “buy,” four recommend a “hold,” and one recommends a “sell.” The average 12-month price target estimate is $40.57, indicating that the stock is trading at a discount of 66.0% to average estimates.

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