Russ Cohen

JD.com Stocks: From Hopeful Beginning to a Disappointing Start in 2024
JD.com Stocks: From Hopeful Beginning to a Disappointing Start in 2024


Even President Xi is bearish on China

Investors had high hopes for a fresh start in 2024 after a turbulent 2023 for JD.com (NASDAQ: JD). However, the year commenced on a sour note as shares of the prominent Chinese e-commerce company plummeted on the first trading day. The catalyst behind this decline was a convergence of discouraging comments from President Xi Jinping and disheartening economic data, which led to a 5.9% drop in JD shares. Concurrently, the Nasdaq Golden Dragon Index, primarily representing Chinese tech stocks, experienced a significant 3.5% dip, highlighting the broad sector-wide downturn.

Implications for JD.com

The hostile stock climate was largely instigated by President Xi’s New Year speech, coupled with a disappointing Purchasing Managers’ Index (PMI) report indicating a contraction in factory activity. President Xi’s acknowledgment of the challenges faced by enterprises and the labor market, despite his attempt at providing an optimistic outlook, has cast a shadow over the Chinese economy. This development portends a challenging environment for JD.com, as the company’s success is closely intertwined with the overall health of the Chinese economy. Unlike its competitors, JD.com has a more limited exposure to international markets.

Furthermore, JD’s recent financial performance has been lackluster, with a mere 1.7% increase in revenue during the third quarter, a significant departure from its pre-pandemic growth trajectory. Founder Richard Liu has underscored the necessity for the company to become more competitive, particularly vis-à-vis rapid-growing peers like Pinduoduo. With the ongoing struggle of China’s economy, JD.com is faced with the arduous task of intensifying its competitiveness and pricing strategies vis-a-vis other market players.

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*Stock Advisor returns as of December 18, 2023