Shares of JD.com (NASDAQ: JD), the Chinese e-commerce giant, tumbled today following a lackluster earnings report from its close competitor Alibaba (NYSE: BABA), indicating repercussions for the entire sector.
As of 1:19 p.m. ET, JD stock was down 4.5%, while Alibaba stock had fallen 6.4%.
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Chinese E-commerce Sector Continues to Falter
Investors were optimistic for Alibaba’s December quarter, hoping for a reprieve from ongoing struggles in Chinese tech stocks. However, the disappointing 5% revenue growth to $36.7 billion perpetuated concerns over the weakness in the Chinese e-commerce industry. Alibaba’s core commerce group, Taobao and Tmall, experienced a mere 2% revenue rise to $18.2 billion, reflecting a worrisome trend for JD as well. Alibaba’s price-competitive strategy resulted in marginal order volume growth, contributing to its underwhelming performance. The company’s adjusted earnings per share of $2.67, a 2% decline from expectations, added to the market’s disappointment.
Implications for JD.com
Both Alibaba and JD have faced significant revenue deceleration due to challenges with the Chinese economy and escalating price wars in e-commerce. Notably, JD managed just 1.7% revenue growth in its previous quarter. With JD’s third-quarter earnings report forthcoming in March, analysts anticipate a 1.5% drop in revenue to $42.1 billion and a slip in earnings per share from $0.70 to $0.63. However, the low projections might offer some solace to JD investors as they brace for the upcoming report.
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Jeremy Bowman has positions in JD.com. The Motley Fool has positions in and recommends JD.com. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
