JD.com stock opened higher Thursday but reversed downward following the company's second-quarter earnings report. The China e-commerce giant beat expectations for earnings and revenue, showing its strongest sales growth since late 2021.
JD said it earned an adjusted 4.15 yuan, or 58 cents, per American depositary share for the June-ended quarter. That marked a 49% decrease from a year earlier but beat expectations for 3.65 yuan per ADS that analysts polled by FactSet were forecasting. Sales increased 22.4% to 356.7 billion yuan, or $49.8 billion, compared with analyst estimates of 335 billion yuan.
JD's sales growth was its best mark since the fourth quarter of 2021, accelerating from the 15.8% sales growth the company posted in Q1.
"We saw robust growth in user traffic, quarterly active customers and user shopping frequency on JD's platform, driven by sustained momentum across both our core JD Retail business and new businesses including JD Food Delivery," Chief Executive Sandy Xu said in a news release.
The accelerated growth comes as JD has been investing in growing a meal-delivery service, offering discounts to win market share. JD.com is China's largest e-commerce retailer by overall revenue. Its sales growth has also been helped this year by government subsidies in China designed to boost consumer spending.
"Despite stronger margins in JD retail, increased food delivery spending led to a marginal operating loss, although other income and associate profits supported a positive bottom-line," CFRA analyst Jian Xiong Lim wrote to clients following JD's report. "We see this earnings profile sustaining into (second half) 2025, until the food delivery business reaches scale and its unit economics improve."
On the stock market today, U.S.-listed JD stock fell more than 2% to 31.67 in recent trades. Shares were initially higher following the report. U.S. stock indexes wobbled Thursday as Wall Street reacted to hotter-than-expected wholesale inflation data from the release of the U.S. producer price index.
JD Stock Down 6% This Year
Entering Thursday, JD stock was down 6% year to date. The stock got a hot start to the year but has slumped since early March, hitting a 10-month low earlier this month. JD's push into food delivery has some investors concerned about a hit to the company's overall profitability.
JD stock is also not seeing the same AI boost as e-commerce rival Alibaba Group, which operates a cloud services business. Alibaba stock has rallied 48% this year on cloud and AI hopes.
Coming into its Q2 report, JD stock had an IBD Composite Rating of 84 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
