JD.com Falls 7% on Q3 Revenue Miss

The stock in the e-commerce giant is now falling again after it fully recovered from Beijing's effort to crackdown on monopolies
Anthony RussoNov 16,2020,15:53

Shares of JD.com (HKEX: 09618; Nasdaq: JD) plunged 7% in early trading Monday after posting earnings that beat expectations but sales that just fell short of estimates for the third quarter.

The big Chinese e-commerce rival to Alibaba (NYSE: BABA; HKEX: 09988) said in a statement today that its revenues in the three months through September came in at 174.2 billion yuan ($25.7 billion), up 29% year-over-year on non-GAAP earnings of 50 cents per share. According to The Street, the consensus forecast called for revenues of $25.75 billion, non-GAAP earnings of 41 cents per share.

The stock tumble comes today despite JD.com’s stock fully recovering on Friday after it was slammed over Beijing unveiling new measures to crack down on monopiles.

While it did not appear investors have been overly concerned about JD.com in the short term, it’s still unclear on what impact the new rules would have on one of China’s largest e-commerce players in the long run. Since early last week, investors have taken the opportunity to buy a smaller Chinese e-commerce player Vipshop Holdings (NYSE: VIPS).

Regardless of the sales miss for JD, results reflect the strong recovery seen in the world’s largest e-commerce market. For October, e-commerce sales in China rose 4% year-over-year.

The Beijing-based company attributed the growth in the quarter to its sales of general merchandise products, which hit 58.1 billion yuan ($8.6 billion), representing a leap of 35% from the same period in 2019.

In the 12 months through September, its active customer accounts on its platform rose 32% to 441.6 million. Also, its subscribers for its paid membership program JD Plus, passed 20 million last month.

Meanwhile, November could be a much bigger month thanks to both JD.com and Alibaba setting new records in sales during China’s largest shopping festival known as Singles’ Day that ran from Nov. 1 to midnight on Nov. 12 this year. Both e-commerce giants generated roughly $115 billion in sales.

“Today, as China emerges from the pandemic, we are glad to see that our business partners are recovering rapidly with the support of our online and offline supply chain infrastructure. And our consumer mindshare continues to expand with over 100 million new active users joining our platform compared to a year ago,” Richard Liu, the chief executive officer of JD.com said in a statement today.

He added, “In order to ensure superior customer experience and better serve our business partners, we continued to add new hires even against the backdrop of uncertainties arising from the COVID."

Shares of JD.com have risen 138% year-to-date.

Topics:JD.com, Alibaba, Vipshop.