Can JD.com stock move higher in the second half of 2021?
Shares of JD.com Inc. (JD) were down nearly 30 percent on a year-to-date basis as of August 19 amid a crackdown from Chinese regulators on the country’s tech giants such as Alibaba and tutoring services like TAL Education. Investors were afraid that JD’s business could also take a hit from the ongoing wave of regulatory actions in the region.
However, after JD.com recently announced that it does not expect any material impact from the latest crackdown, investors were relieved. The company made the announcement along with its second-quarter earnings report. As a result, JD.com stock rose to a nearly 5-month high, as investors cheered better-than-expected Q2 results.
Financial Results: Q2, 2021
JD.com reported earnings of 0.50 yuan per share for the three months ended June 30, compared to 10.47 yuan per share in the same period of 2020. On an adjusted basis, the company reported earnings of 2.90 yuan per share, ahead of 2.60 yuan per share projected by analysts.
Total revenue for the quarter rose more than 26 percent on a year-over-year basis to 253.80 billion yuan, easily surpassing analysts’ average estimate of 248.28 billion yuan. Product sales in the quarter rose 23 percent, while service sales jumped 49 percent.
Many e-commerce companies, including JD.com, enjoyed tremendous growth in 2020, primarily driven by lockdown restrictions due to the pandemic. However, those companies now face tougher year-over-year comparisons as people have started revisiting physical stores due to improved pandemic situations.
Nevertheless, JD.com still managed to boost its revenue by 26 percent versus the year-ago quarter despite lesser mobility restrictions that negatively affected online retailers’ sales. Looking forward, JD.com is expected to report revenue growth of 29 percent in fiscal 2021, which seems impressive considering the hard comparisons versus last year. Therefore, we expect JD.com stock to gain more value in the coming quarters.