JD.com Profit Plunged. Why the Stock Is Rising

Dow Jones
Yesterday

JD.com reported a sharply lower profit for its third quarter on Thursday. However, shares rose as the Chinese online retailer’s earnings and revenue were ahead of market expectations with the company signaling it will need to invest less in food delivery in future.

JD.com reported an adjusted profit of 5.8 billion yuan ($815 million), down from 13.17 billion yuan for the same period last year. Revenue rose 15% to 299.1 billion yuan.

Analysts tracked by FactSet had expected JD.com to report a third-quarter adjusted net profit of 4.23 billion yuan on revenue of 294.81 billion yuan,

American depositary receipts of JD.com were up 4.1% in premarket trading, having fallen around 10% this year so far through to Wednesday’s close.

The company and its rivals, Alibaba Group Holding and Meituan, have been locked in an e-commerceprice warthat has weighed on margins across the sector.

Food-delivery has been a particular battleground, prompting China’s top market regulator to call for the companies to engage in “rational” competition.

“As JD Food Delivery continued to scale up and generate deeper synergies with JD Retail, it also achieved sequential investment reduction in Q3, thanks to its improved unit economics performance,” said JD.com CEO Sandy Xu in a statement.

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