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Why JD.com Popped ~10% Today

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JD.com

This morning, Chinese e-commerce giant JD.com (JD) was trading on a strong bullish note. Earlier today, the company’s ADS (American depository share) posted a high of $28.52 for the day, up about 9.8% from yesterday’s closing price. JD’s better-than-expected fourth-quarter earnings results drove these gains. Let’s take a close look at some key highlights of its earnings that fueled the optimism.

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JD’s Q4 2018 results: Key highlights

In the fourth quarter of 2018, JD.com reported adjusted EPS of 0.51 Chinese yuan (or $0.07), up about 65% from 0.31 yuan in the fourth quarter of 2017. This figure was a pleasant surprise to investors as Wall Street analysts were expecting a loss of 0.27 yuan per share.

JD.com’s revenue for the fourth quarter of 2018 jumped 22.4% year-over-year to about 134.8 billion yuan (or $19.6 billion). This total included 20.1% and 45.7% year-over-year growth in the company’s product and service segment revenues, respectively, last quarter. Big promotional offers on Chinese Single’s Day (November 1) boosted JD’s sales performance in the fourth quarter.

2019 outlook

In the first quarter of 2019, JD.com expects its revenues in a range of 118 billion yuan to 122 billion yuan. This revenue guidance was in line with analysts’ consensus revenue estimate of 119.5 billion yuan and reflected 18%–22% year-over-year growth potential in the company’s first-quarter revenue.

After a massive drop of 49.5% in 2018, shares of JD.com have risen 24.1% year-to-date as of February 27. Investors’ high expectations from China’s e-commerce industry despite recent fears of an economic slowdown could be one reason for JD.com’s solid year-to-date gains. Other Chinese companies Huya (HUYA), Baidu (BIDU), Alibaba (BABA), Tencent Holdings (TCEHY), Bilibili (BILI), Weibo (WB), Tencent Music (TME), 58.com (WUBA), and NIO (NIO) have risen 66%, 2.3%, 34.7%, 10.5%, 36.1%, 25.7%, 39.9%, 36.0%, and 54.6%, respectively. In contrast, Chinese car e-commerce company Uxin (UXIN) has lost about 6.8% in 2019 so far.

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