JD.com Gains Traction In Retail, Delivery As Analyst Flags Margin Risks

Core Viewpoint - Wall Street analysts have rerated JD.com, Inc, lowering price targets after the company reported first-quarter results, leading to a decline in stock price [1] Financial Performance - JD.com reported net revenue of 301 billion Chinese yuan (approximately $41.5 billion), reflecting a year-over-year increase of 15.8% and surpassing consensus expectations by 11 billion Chinese yuan [2] - Adjusted EPADS for the first quarter was 8.41 Chinese yuan (or$ 1.16), exceeding consensus by $0.19 [3] Growth Drivers - The trade-in program contributed to a 17% growth in 3C and home appliances, with gross margin growth accelerating to 15% from 11% previously [3] - Management raised the fiscal 2025 retail growth outlook to double-digit growth, supported by improving consumer sentiment and enhancements to its ecosystem [4] Strategic Initiatives - JD.com entered the food delivery market, achieving nearly 20 million daily orders within three months, indicating significant potential in the on-demand retail ecosystem [6] - The company has repurchased$ 1.5 billion in shares year-to-date, reducing its share count by 2.8% [3] Market Outlook - Analysts have raised revenue estimates for fiscal 2025 to 1.290 trillion Chinese yuan (up 11.6%) and for fiscal 2026 to 1.342 trillion Chinese yuan (up 3.8%) [8] - However, adjusted EPADS estimates were lowered to $4.61 for fiscal 2025 and$ 4.95 for fiscal 2026 due to increased pressure on margins [8] Challenges and Adjustments - JD.com withdrew its fiscal 2025 group-level profitability guidance due to limited visibility and ongoing market volatility, indicating a need for dynamic adjustments in promotional strategies and expansion plans [7]