Shares of China’s second-biggest e-commerce company continue to solidify their recovery move.
Shares of China’s e-commerce company JD.com (JD 4.65%) are 4.4% higher as of 1:54 p.m. ET Thursday, according to numbers from S&P Global Market Intelligence. The move — in contrast with rival Alibaba‘s stock’s tumble today — is in response to the company’s surprisingly solid second-quarter results.
JD.com is earning its way back into investors’ favor
JD turned a little over $4 billion worth of revenue into per-share earnings of $1.13 for the three-month stretch ending in June. Sales were up only slightly on a year-over-year basis, but still topped expectations. Profits, meanwhile, were markedly better than analysts’ estimates, nearly doubling JD.com’s bottom line from the comparable quarter of 2023.
Although online retailing is by far its single-biggest source of revenue and earnings, its logistics arms actually experienced the most revenue and earnings growth in JD’s second quarter.
It’s a welcome report and response to shareholders who watched JD stock pull back from its May peak following the release of the company’s first-quarter numbers. Although those results also topped expectations thanks to top-line growth of 7%, in retrospect the pre-report rally left JD shares vulnerable to profit-taking regardless of how well or how poorly the company did during the quarter in question.
Thursday’s big move, however, is also another piece of bigger-picture evidence that this e-commerce stock is finally ready to reverse its prolonged pullback from 2021’s peak. At the very least JD.com shares are no longer losing long-term ground.
Today’s move cements budding bullishness in place
Yes, that’s the call, although it comes with a significant caveat. That is, investors interested in stepping into this budding recovery should know that continued volatility is almost a certainty even if it is ultimately working in JD.com stock’s favor. It won’t be easy to own. And, it still poses above-average risk.
Trends are moving in JD.com’s favor again, however. China’s retail sales grew 2.7% last month versus forecasts of only 2.6%, extending a 17-month streak of some degree of year-over-year improvement. Reuters further reports that China’s third-quarter GDP should grow by 4.8%, en route to 4.5% growth for the entirety of 2025. While some observers are expressing doubt, the nation’s current economic growth certainly appears to be spurring expected consumer spending. That’s unlikely to change in the foreseeable future.
This might help: JD shares are bargain-priced right now at only 7.6 times next year’s expected earnings. There’s plenty of room for this stock to absorb any erratic results going forward.
James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JD.com. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
