Over the last week, JD.Com Inc. (JD) stock has decreased by 4.48%.
JD.com, Inc. (NASDAQ:JD)
Late in August, a well-received earnings report was released, which helped JD.com, Inc. (NASDAQ:JD) gain momentum. The Chinese e-commerce company’s shares, however, have struggled to gain traction as investors fret over escalating tensions between the US and China on a global scale. Is now the right time to buy?
Strong Profits in a Complex Area
JD’s second quarter earnings report, which was excellent and featured better-than-anticipated results on both the top and bottom lines, was released in late August. The Beijing-based company reported Q2 non-GAAP EPS of $0.61, which was $0.20 higher than forecasts. The corporation also reported better-than-expected sales at the same time, with top-line revenue rising 5% from the previous year to reach $40 billion, $1.42 billion more than analysts had forecast.
In the meantime, JD’s yearly active customer accounts increased by 9.2% to 580.8M in the year that ended on June 30. In contrast, 531.9M were spent the year before.
The results immediately increased the stock price. After the financial results were revealed, shares increased by 3% and continued to rise in the sessions that followed.
Several days later, amid indications that the US and China were close to reaching an agreement on the auditing of Chinese stocks listed in the US, an additional upswing was stoked. JD increased by roughly 14% on the announcement.
The stock has nevertheless struggled to hold onto these gains. JD has been negatively impacted by investors’ reluctance to invest money in Chinese stocks due to Beijing’s constantly shifting regulatory landscape. A further barrier to investing in the region has been created by the ongoing hostilities between China and the United States on Taiwan’s legal status.
Overall, since JD’s quarterly results were released, shares have increased by around 8%. However, for the entirety of 2022, shares have decreased by about 10%.
Several other Chinese internet companies, including as Tencent Holdings (OTCPK:TCEHY) and Alibaba (BABA), which all experienced declines of more than 20% in 2022, have fared worse than JD. Baidu (BIDU), on the other hand, has outperformed JD, declining just 5%. As a result of its own recent earnings report, Pinduoduo (PDD) has increased more than 25% since the end of 2021.
Is it a Buy?
Wall Street has a largely bullish outlook on JD. 29 of the 38 analysts contacted by Seeking Alpha to rate the stock have given it a Strong Buy recommendation. Seven more have assigned the stock a Buy rating. There are now only two analysts who have assigned the e-commerce company a Hold rating.
Market analysts have set an average price objective for the stock of $83.07 per share when it was trading slightly under $60 on Tuesday. There are targets as high as $113.73 per share and as low as $53.75 per share in this range.
The stock is rated well by Seeking Alpha’s Quant Ratings as well. When the factor grades are broken down, the stock obtains grades of A and A- for momentum and profitability, respectively. The stock also receives a C+ for the company’s growth prospects and a D for its value.
Cavenagh Research, a contributor to Seeking Alpha, has a Buy recommendation on the stock and is positive for the company. The analyst foresaw a wave of profit upgrades following the most recent quarterly update. Another Seeking Alpha contributor, Envision Research, has a more cautious view on the stock and rates it as a Hold, partly because investing in China has risks.
Featured Image- Megapixl @Andreistanescu