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JD Stock Rose after Its Earnings, Could Benefit from Coronavirus


Mar. 4 2020, Updated 11:31 a.m. ET

JD.com (NASDAQ:JD) stock rose by more than 12% on Monday—its biggest daily gain so far in 2020. Notably, JD.com is one of the top e-commerce companies in China. The stock rose after the company reported strong earnings for the fourth quarter of 2019. JD provided an encouraging revenue outlook for the first quarter of 2020.

The company reported fourth-quarter revenue of 170.7 billion yuan or $24.5 billion—an increase of 27% year-over-year. The revenue beat the consensus estimate at 167 million yuan. The company posted an adjusted EPS of 0.54 yuan, which rose from 0.51 a year ago and beat the consensus estimate at 0.44 yuan.

JD wrapped up 2019 with a strong balance sheet too. The company finished the year with $37.3 billion in assets, consisting of more than $9.0 billion in cash. The company only has $450 million in long-term debt.

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JD stock could ride the coronavirus outbreak

The coronavirus outbreak has disrupted normal life in China. Authorities have restricted movements in cities hit by the deadly virus. Also, people in China are choosing to stay indoors to avoid catching the virus. Many Chinese companies are encouraging their employees to work from home to curb the spread of the coronavirus.

Since people avoid public places due to the virus, online shopping has increased in China. The shift bodes well for JD, which operates one of the most popular online shopping platforms in China. For years, JD invested in building a strong logistics system, which allows it to deliver orders to customers’ doorsteps in minutes. Now, the investment is paying off. The demand for home deliveries has increased due to the coronavirus.

At the end of 2019, JD had 362 million active shoppers on its platform compared to 305 million the previous year. Notably, JD stock gained 68% in 2019.

At least 10% revenue growth this quarter

JD expects its revenue to grow at least 10% in the current quarter due to increased demand for e-commerce services. In contrast, Alibaba warned that its revenue might fall in the current quarter. The coronavirus continues to impact business activities.

The post-earnings jump has driven JD stock’s YTD (year-to-date) gains to 17.7%. In contrast, Alibaba stock has fallen 2.2% YTD. Pinduoduo (NASDAQ:PDD), a once high-flying Chinese e-commerce stock, has fallen 5.4% YTD.


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