Michael Vi
JD.com (NASDAQ:JD) stock has slumped about 53% year-to-date, in a year the e-commerce company saw intense competition from PDD (PDD), much like Alibaba (BABA), and a slowing Chinese economy.
PDD — which operates shopping app Temu — has seen its shares surge nearly 76% year-to-date, while Alibaba (BABA) has tumbled about 19%. The decline has not gone unnoticed by the top names from Alibaba and JD.com.
Earlier this month, Richard Liu, founder and chairman of JD.com, said that the way the Chinese e-commerce giant currently operates is “huge, bloated, and inefficient” and needed change. Alibaba’s (BABA) Co-Founder Jack Ma had similar thoughts last month, when he urged the company to correct course in a surprise internal memo calling for fundamental changes. Ma even praised decisions taken in recent years by rival PDD (PDD) to take market share from the company.
What lies ahead for JD.com in 2024?
Seeking Alpha Analyst Larry Cheung said that China and Hang Seng stocks have been mired in deep malaise for much of 2023, and there have been few survivors of this year’s enduring bear market for China ADRs and H-Shares.
“That being said, JD’s latest earnings quarter – while not perfect – offers a window of opportunity where investors may consider that at long last the stock (along with the rest of China’s ECOM sector constituents Alibaba and Meituan) has seen the final leg lower and may enter the first stages of a choppy bottoming process,” said Cheung.
Cheung noted that if the recent 24/share level lows can hold, the company has a first-stage advance opportunity to revisit the neckline technical structure of 33-34/share at some point in 2024.
Meanwhile Seeking Alpha Analyst Geoffrey Seiler thinks that the stock remains too cheap.
“At its current valuation, it’s hard to imagine not seeing JD’s stock price move higher from here over the next 5 years, barring a major black swan event such as China invading Taiwan. The company isn’t hitting on all cylinders, but it is making some improvements and it should benefit if the Chinese consumer begins to improve,” Seiler noted.
What Seeking Alpha Quant and Wall Street Analysts’ Ratings say?
JD.com (JD) has a SA Quant Rating — which takes into account factors such as Momentum, Profitability, and Valuation among others — of Hold. The stock has a factor grade of A+ for Profitability and A- for Growth. Meanwhile, the Seeking Alpha authors’ average rating is more positive with a Buy.
The average Wall Street Analysts’ Rating concurs and has Buy rating of its own, wherein 25 out of 39 analysts tag the stock as Strong Buy.
Latest third-quarter earnings and Q4 forecast
The company’s non-GAAP net income per American depositary share, or ADS, grew about 6.9% year-over-year to RMB6.70 ($0.92), while net revenues increased 1.7% year-over-year to RMB247.7B ($34B). Both top and bottom line numbers surpassed analysts estimates.
Fourth quarter consensus EPS estimate for JD.com (JD) is $0.66, while consensus revenue estimate is $41.97B.