JD.com Rallies 13% On Swing To Q2 Profit

JD.com Rallies 13% On Swing To Q2 Profit
August 14, 2019


Shares of JD.com Inc. (NYSE: JD), one of the world’s largest e-commerce platforms based on sales, jumped 12.89% or $31.50 to close at $30.66 after the company swung to profit in the second quarter of fiscal 2019. The company also blew away earnings and revenue estimates of analysts. JD.com also issued an impressive third-quarter revenue forecast.

Beijing, China-based company, posted second-quarter revenues of RMB150.28 billion ($21.89 billion), an increase of 22.9% from RMB122.29 billion in the comparable quarter last year. The FactSet Consensus estimate was $20.87 billion for the quarter. The robust performance of the e-commerce business enabled the company to surpass revenue expectations.

During the quarter, JD.com reported a net profit of RMB618.8 million ($90.14 million), or RMB0.36 a share, compared to a net loss of RMB2.21 billion in the year-ago period. Analysts had anticipated a net loss of $6.30 million for the June quarter. Excluding one-time charges, adjusted earnings were RMB2.30 per share ($0.33), beating FactSet estimate of $0.06 per share.

Segment-wise, product revenue rose 20.8%, while net service revenue grew 42.0%.

The second-quarter results were boosted by the company’s successful June 18th anniversary sale, a promotional event that lasted for 18 days, from June 1st to June 18th. Notably, during the annual sales event, luxury fashion brand Prada introduced first-party flagship shop on the e-commerce platform of JD.com to offer three key brands, namely Car Shoe, Prada, and Miu Miu.

The company’s CEO Richard Liu explained the reasons for the strong performance in the second quarter: “Highlighted by our successful June 18th anniversary sales event, JD’s strong performance in the second quarter further demonstrated the resilience of our superior business model in a highly competitive industry. JD’s commitment to bringing users the best overall shopping experience continues to win over consumer mindshare. We will remain focused on leveraging technology and innovation to enhance our offerings, increase efficiency and drive shareholder value for the long term.”

By the end of second-quarter, JD.com had 321.30 million annual active customer accounts, up from 310.50 million in the comparable quarter last year.

The company’s CFO Sidney Huang elaborated on the impact of innovative technologies on its performance. Huang said, “Our economies of scale and innovative technologies are driving operating efficiency and further strengthening our business model. Looking ahead, we will continue to invest in user experience and our talented workforce to further grow the business and create value for all of our stakeholders.”

During the second quarter, the company inked partnership deals with luxury brands such as Mulberry, Prada, and Italian footwear brand Giuseppe Zanotti. As per JD.com’s earnings report, since April, over 20 luxury fashion houses have started using its platform to sell their products.

Similar to Amazon’s Prime Membership, JD.com also offers a paid membership program named JD PLUS. In June, the company entered into a collaboration with 19 global hotel brands such as InterContinental Hotels and Resorts and WANDA hotels and resorts to award special discounts to members and promotional offers to JD PLUS members.

For the third quarter, JD.com anticipates revenues in the range of RMB126 billion to RMB130 billion, reflecting a growth rate of between 20% and 24% compared with 3Q18.

The swing to profit in the second quarter, earnings beat, and upbeat Q3 view are anticipated to keep the stock bullish in the short-term.

The historical price chart indicates that the stock has closed above its 50-day moving average. Additionally, the Chaikin money flow indicator is having a positive reading. As a result, we can expect the stock to move up in the short-term.

JD - technical analysis - 14th Aug 2019

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Janine is our editor for related stock market news. Andrew and Janine will be focusing on providing the latest trends and where the next hit could be

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