Bad News for China - JD.com Earnings Beat Expectations, Investors Yeet Shares in Anyway...

Well despite the fact that China’s economy is limping, JD.com somehow managed to post third-quarter results that were so decent… the market responded with a -4% drop LOL. You know, because why applaud a win, when you can just yeet the stock instead? 

(Source: Giphy) 

In short, JD reported earnings of 8.68 yuan per ADS (around $1.20, in U.S. of A dollars), beating the 7.57 yuan analysts were expecting. All good things, until revenue came in at 260.39 billion yuan, just shy of the 260.43 billion analysts had hoped for… *sigh*. Yep, they missed by a fraction of a rounding error, and investors decided that was reason enough to hit the “panic” button. 

(Source: IBD) 

On the plus side though, revenue growth actually picked up to 5.1%, which is an improvement from last quarter’s snooze-worthy 1.2%. JD’s CEO, Sandy Xu, tried to sound upbeat about consumer sentiment “improving,” but to be honest—improving from “bad” to “slightly less bad” isn’t exactly a reason for the street to get all horned up over it. 

Additionally, even though revenue didn’t appease a few guys who make “excel sheets’ their entire personality,  JD’s stock is actually up 28.68% YTD. BUT,  between China’s sluggish economy and the looming threat of more U.S. tariffs, it’s no surprise investors are starting to have trust issues. 

(Source: Giphy) 

As for what’s driving JD’s growth, electronics and home appliances got a nice little boost, and their retail division grew 6.1% to 225 billion yuan. All good things, all good things, but let’s not forget they’re still in a cut-throat knife fight with Alibaba, PDD Holdings (Temu), and now Douyin (a.k.a. TikTok’s Chinese sh*t cousin) for market share. 

This of course, leads me to JD’s world class strategy to really stick it to their competition: Discounts. Lots of them. Singles’ Day—China’s Black Friday on steroids—was a big hit, with shoppers snapping up deals left and right. The collateral damage? Their marketing costs jumped 26% this quarter. That’s 10 billion yuan spent trying to convince people to buy stuff in an economy where most folks are still pinching pennies.

(Source: Barrons) 

Looking forward, JD’s rolling out trade-in programs to tap into a 150 billion yuan government subsidy aimed at boosting spending on bigger-ticket items. They’re also diving deeper into live streaming, presumably to keep up with all the degenerates on TikTok who think BNPL (Buy Now Pay Later) is a sound financial planning strategy. 

However, even with that, JD still has somewhat of an uncertain road ahead. China’s economic recovery is moving slower than Arizona can count ballots, and the threat of U.S. tariffs is still hanging over their heads. Analysts remain optimistic, though, with 89% giving JD a “Buy” rating. 

(Source: Giphy) 

Meaning,  If JD can keep steady and not burn a hole through their marketing budget, they might just weather the storm. In the meantime though, JD.com is up 28.68% YTD, and down -10.33% over the past five days - so yeah, not a great week for the China giant. But hey, may the sh*t show continue next week, friends - and as always, stay safe and stay frosty! Until next time…

P.S. Life comes at you fast friends, and while your favorite online stock guru is out here struggling to make heads or tails on the markets short-term direction - our team and our premium members at Stocks.News are absolutely CRUSHING it. How so? Well it all comes down to back-to-back-to-back-to-back-to-back massive wins over the last few weeks. Don’t believe me? Click here to see for yourself once we drop our next alert. 

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