|Bid||31.12 x 28000|
|Ask||31.25 x 1400|
|Day's Range||31.13 - 31.79|
|52 Week Range||19.21 - 32.38|
|Beta (3Y Monthly)||1.44|
|PE Ratio (TTM)||212.45|
|Earnings Date||Nov 18, 2019 - Nov 22, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||36.16|
In breaking news on Wednesday, President Trump announced that he would delay scheduled tariffs against China by two weeks. As he put it, the delay represents a goodwill gesture to China, and comes at the request of China's Vice Premier, Liu He. And on the surface, this development seemingly bodes well for JD.com (NASDAQ:JD) and by extension JD.com stock.Source: Michael Vi / Shutterstock.com After jumping to a strong start earlier this year, JD stock encountered upside resistance around the $31 level. In the beginning of April, shares tried to break past this level, but failed, sparking a downward slide. Later in May, JD.com stock tried to break beyond $31, but the markets again stymied the effort.During the past summer, the e-commerce and technology firm enjoyed some strong sessions. In fact, JD.com stock moved beyond the aforementioned resistance level a few times. Unfortunately, the efforts ultimately went for naught.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn the one-year chart for JD stock, we can clearly see a consolidation pattern. As InvestorPlace's Tom Taulli noted recently, this pattern is setting shares up for either a breakout or a breakdown. My colleague argues for the former, noting some strong fundamental catalysts. These include a robust and growing Chinese middle class, greater allocation of Chinese GDP to domestic consumption, and an upwardly moving e-commerce market. * 10 Stocks to Sell in Market-Cursed September Significantly, Taulli also mentioned that the trade war could be beneficial for JD stock. That's because the dispute has driven China to focus on its domestic economy, bolstering JD in the process.With this latest gesture from an otherwise strident Trump, it seems the case for JD.com stock breaking out is won. So, should you act on this diplomatic news? JD.com Stock Remains UnconvincingObviously, President Trump extending a small but meaningful olive branch is important. In the nearer term, no one should be surprised to see names like Alibaba Group (NYSE:BABA) and Tencent (OTCMKTS:TCEHY) jump higher.When it comes to China-related developments, the news seemingly kept getting darker for JD stock. With the U.S. and Chinese administration set to discuss their differences, this is the positive narrative that the bulls needed.But the story doesn't end there. Even from early in his administration, President Trump earned a reputation for flip-flopping. Granted, every politician contradicts themselves; otherwise, they wouldn't be politicians. That said, Trump can turn on a dime.Infamously, Trump stated in 2017 that North Korea will be met with "fire and fury" if the hermit nation threatened the U.S. In June of this year, Trump characterized his relationship with North Korean dictator Kim Jong Un as a "great friendship."Therefore, JD.com stock has a credibility problem, but it has nothing to do with the underlying company. Instead, we really don't know what's going to happen next. Of course, uncertainty is something that Wall Street dislikes.I'm not sure what the probabilities are regarding a trade deal in the nearer term. But based on Trump's unpredictable nature, I wouldn't bet too high on a resolution. Remember, Trump must look strong to his voting base because he's losing support elsewhere.Therefore, if a deal doesn't materialize, JD stock risks significant volatility. While many China bulls tout the country's massive middle class, we got to put those numbers into context. With a population size of over 1.4 billion people, on a GDP-per-capita basis, the Chinese are still poor. Plus, initiatives to push into China's lower-ranked cities may not pan out due in part to the country's sizable percentage of agricultural workers. What Happens If We Get a Deal?Suppose though that we do get a deal. Does that optimistic scenario spell game on for JD.com stock?Here again, I remain hesitant. I hate to bring up a politically controversial subject, but questions exist regarding China's economic data. For instance, in June of this year, the Chinese city of Guanghan allegedly falsified its economic data.This scandal brings up an uncomfortable topic: when we say that China's middle class is growing robustly, what data is that based on?Additionally, I'm inclined to believe the negative reports as opposed to the fluff stats. Because if China's middle class is booming, why are their auto sales plummeting? Other metrics are falling too. A trade deal probably won't fix these core problems. * 10 Battered Tech Stocks to Buy Now Therefore, the smart move is likely to wait out JD stock. Sure, the technical pattern is interesting. But with a volatile President and an even more volatile economic situation, gambling here seems more risky than rewarding.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell in Market-Cursed September * 7 of the Worst IPO Stocks in 2019 * 7 Best Stocks That Crushed It This Earnings Season The post A Tempting Chart and Possible Trade War Truce Won't Save JD.com Stock appeared first on InvestorPlace.
It would seem like the news has been pretty good of late for Alibaba Group (NYSE:BABA) stock … with one obvious exception. The last two earnings reports have looked impressive. The overhang of a major stockholder is ending. And yet Alibaba stock has stayed stuck, trading sideways since February.Source: Nopparat Khokthong / Shutterstock.com To be sure, the U.S.-China trade war presents an apparent stumbling block in front of BABA stock. But rival JD.com (NASDAQ:JD) has outperformed Alibaba shares of late, while facing the same trade-driven macro headwinds at home.JD isn't the only Chinese stock with better returns. Yes, Alibaba Group shares have returned 27% so far this year. That's better than the 16% average of China's 21 U.S.-listed large-cap (>$10 billion) stocks. But that return puts BABA stock just seventh in the group, well behind leaders New Oriental Education & Technology Group (NYSE:EDU) and Pinduoduo (NASDAQ:PDD), the latter of which has almost doubled in the last two-plus months.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSo, relative underperformance, a cheap valuation, and Alibaba's market-leading status would seem to clear a path for BABA stock to finally break through $200 and beyond. After all, it's hard (though not impossible) to see external conditions being much worse, yet Alibaba has grown earnings and Alibaba stock has managed to rise.That path is open. But the concern has to be that if BABA shares stay stuck, it could signal they're going to be stuck for a very long time. What's Gone Right (and Wrong) for Alibaba StockAlibaba Group has had some headwinds in 2019. The trade war has pressured consumer and business confidence in China, as several companies have noted in recent months. Protests in Hong Kong have only added to the geopolitical risk, and likely led to Alibaba's decision to delay its listing on the Hong Kong exchange. * 7 Deeply Discounted Energy Stocks to Buy Major shareholder Altaba (NASDAQ:AABA) is liquidating its Alibaba stock. According to Alibaba's second quarter release, that company (formerly Yahoo!) sold almost 10% of Alibaba shares outstanding between May 20 and August 9.There are pressures on the business and pressures on the stock. And yet Alibaba has posted strong back-to-back earnings reports. Revenue increased 51% year-over-year in the fiscal fourth quarter (ending March) and another 42% in Q1. Adjusted EPS handily beat Street estimates in both quarters.Meanwhile, BABA stock hasn't exactly soared -- but it's held up. The stock bounced from levels around $150 in late May, amid the Altaba selling, and has neared $180 three times in the past few weeks.Given those external pressures, the case for BABA stock here is that in a tough environment, investors still were happy to buy and/or own shares. So what happens when that environment gets better? After all, Altaba's liquidation is likely over at this point. The trade dispute should be resolved at some point, even if that point isn't necessarily anytime soon. Put another way, it seemingly only can get better for Alibaba Group, and for Alibaba stock, from here. Long-Running Concerns About BABA StockThe catch is that for some investors, it's not going to get better for BABA stock. To bears, Alibaba has significant structural problems. Its VIE structure -- shareholders actually own a piece of a variable interest entity in the Cayman Islands, not Alibaba itself -- makes BABA a no-go for some investors.Accounting issues have long dogged the company. They were raised again in the decision to go forward with the Hong Kong listing. As I noted at the time, it was strange for Alibaba to sell stock at seemingly cheap prices to raise capital when it had plenty of cash already. Indeed, the company is paying $2 billion to acquire Kaola from NetEase (NASDAQ:NTES), a deal it is financing from cash on hand. * The 8 Worst Stocks to Buy Before the Trade Turmoil Cools Off There have been worries about self-dealing, highlighted by Alibaba's move of Alipay to former CEO Jack Ma. And many investors ignore Chinese stocks altogether, worried about a "hard landing" or, worse, an implosion of the economy still run by a nominally Communist single party. Can Alibaba Group Stock Finally Rally?Those skeptics admittedly could be wrong. "Hard landing" predictions, for instance, have been made for at least this entire decade. The VIE structure could change once Chinese regulations do. And, to at least some extent, a 20x forward P/E multiple incorporates those risks.But at least for now, those skeptics and that skepticism seem to matter. They're at least one reason why a proverbial lid has stayed on BABA stock. (Shares at this point haven't moved for two years now.) They're why, to some investors, Alibaba stock seems like a generational opportunity: an e-commerce leader in a country with over a billion citizens trading at a discount to many U.S.-based large caps with minimal growth. Other investors simply see the stock as a trap at almost any price.If the news around Alibaba stock gets better, particularly with the Altaba overhang gone, BABA stock has to rally. Otherwise, BABA starts to look like a stock that looks cheap - and will always look cheap, given the structural risks assigned by the market. As bearish as I've been on BABA, I can see that path to $200+. If Alibaba stock doesn't take that path, however, it might be time to worry.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell in Market-Cursed September * 7 of the Worst IPO Stocks in 2019 * 7 Best Stocks That Crushed It This Earnings Season The post If Alibaba Stock is Going to Rally Again, Now is the Time appeared first on InvestorPlace.
In the pantheon of U.S. companies, there have been instances where the CEO and/or founders are inextricably linked to those firms and, to some extent, the performance of the stocks. Think Warren Buffett at Berkshire Hathaway (NYSE:BKR-B), the late Steve Jobs at Apple (NASDAQ:AAPL) or Jeff Bezos at Amazon (NASDAQ:AMZN).Source: Shutterstock The best comparison offered by a Chinese company is Jack Ma of Alibaba Group (NYSE:BABA). All Ma has done is build Alibaba into the largest e-commerce company in the world's largest internet market, while overseeing a double in Alibaba stock price since its initial public offering (IPO) roughly four years ago.Described by some as flamboyant, Ma departs the $460 billion behemoth he founded on Tuesday. He will be succeeded by softer spoken accountant Daniel Zhang. On the surface, the Ma-to-Zhange transition looks a little bit like the move to Tim Cook at Apple after Jobs passed away. Alibaba stock investors can only hope Zhang can deliver appreciation that is even in the ballpark of what Cook has delivered for Apple investors.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Stocks to Sell in Market-Cursed September Ma, China's richest man, has pledged to stay on in some capacity, likely mentoring management. They found hand-picked Zhang, so that could be an important factor for Alibaba stock owners.Zhang "has the logic and critical thinking skills of a super computer, a commitment to his vision, the courage to wholeheartedly dare to take on innovative business models and industries of the future," said Ma when he made the announcement last year. BABA Making DealsLike Amazon in the U.S., Alibaba is an e-commerce juggernaut in China, but that status does not mean it's a true monopoly. As is the case with Amazon on domestic, Alibaba must contend with e-commerce competitors in China, including JD.com (NASDAQ:JD) and Tencent (OTCMKTS:TCEHY). To take the Amazon comparison even further, Alibaba's playbook is similar to its American rival in that the Chinese company has become a player in other businesses beyond online retail.In the case of Alibaba stock, catalysts include growth in the cloud computing and mobile payments arenas, among many others. To the point of spreading its week, Alibaba has recently been on a shopping spree of its own.In recent days, the company agreed to buy e-commerce business Kaola from Chinese gaming company NetEase for $2 billion. That deal is aimed at getting Alibaba in front of more luxury shoppers."Kaola, launched by NetEase in 2015, aggressively targets shoppers in China by offering products from top brands such as Gucci, Shisheido and Burberry, primarily sourcing goods directly from suppliers to resell to consumers," according to Reuters.The deal also features an investment in Netease Cloud Music, which could be a catalyst down the road for Alibaba stock because it would better enable the company to compete in an arena dominated by rival Tencent."While TME's market position looks very strong, with more capital raised by Netease Cloud Music and possible future deeper collaboration with Alibaba's Xiami and its overall digital entertainment and SuperVIP membership program, we believe the joining force between Netease and Ali will likely strengthen Netease Cloud Music's competitive positioning against TME," said Citibank analyst Alicia Yap. Bottom Line on Alibaba Stock: Don't Forget the CashAnother catalyst for Alibaba stock is cash. At the end of the second quarter, the company had cash on hand of $33.72 billion, a year-over-year increase of almost 15%. That's a large enough stockpile to enable the company to do more acquisitions and probably some of size because with Alibaba stock commanding a market value of $460 billion, bolt-on deals are nice, but purchases of scale likely make the most sense.Additionally, Alibaba is likely to continue growing at a compound annual growth rate (CAGR) around 30%, implying the 20.34x forward earnings multiple Alibaba stock is attractive if not inexpensive. Plus, China's expanding e-commerce market, one that is helpful for competitors to Alibaba, benefits the entrenched giant, too."The growth in recent quarters from all platforms in the industry gives us the comfort that the growing (e-commerce) sector is probably the last to be impacted even in a prolonged period of macro turbulence," said Bernstein analyst Davi Dai.Todd Shriber does not own any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell in Market-Cursed September * 7 of the Worst IPO Stocks in 2019 * 7 Best Stocks That Crushed It This Earnings Season The post Acquisitive Alibaba Confronts Life Without Jack Ma appeared first on InvestorPlace.
Shares of Chinese premium electric vehicle (EV) maker NIO (NASDAQ:NIO) have been on a roller coaster ride ever since the company went public about a year ago. Over the course of the past year, the NIO stock price nearly doubled from a $6.26 IPO price to $12 within its first few days on Wall Street. That gain was clawed back to $6 over the next few months. Then, the ride took off again in early 2019, going to $14. Then, investors kicked shares lower over the past six months to where they are now, just above $3.Source: THINK A / Shutterstock.com Amid all this volatility, I've consistently sounded a cautious and bearish tone on NIO stock. My thesis has been pretty simple.There are a lot of EV brands in China. Not all of them will make it long term. In fact, very few of them will actually survive. Right now, probabilities and fundamentals suggest that NIO won't be one of the survivors. As such, while NIO stock could go boom long term, the more likely outcome is for the stock to go bust.InvestorPlace - Stock Market News, Stock Advice & Trading TipsI maintain that cautious thesis today.To be sure, there are signs that China's auto market and economy are re-accelerating. That's good news for NIO stock. But, until this company can impress investors with numbers that it will remain a relevant player in China's booming EV market for the foreseeable future, I don't think NIO stock will stage a meaningful move higher.As such, there's no rush to buy into NIO stock today. In this situation, patience is your friend. Monitor the China EV market and NIO's trends in that market from the sidelines. If signs appear that NIO is improving its competitive positioning, buy into NIO stock. Until then, stay away. The Good News For NIOThe good news for NIO stock is that China's economy and auto market appear to be bouncing back after a multi-quarter slowdown. * 7 Deeply Discounted Energy Stocks to Buy On the broad economic front, most data coming out of China implies that the worst of the country's multi-quarter economic slowdown -- which started in early 2018 -- is now in the rear-view mirror. Retail sales trends, in a downtrend since early 2018, have gradually improved over the last few months. PMI readings, similarly in a downtrend since early 2018, have stabilized over the last few months. Industrial profit growth rates have shown consistent improvement throughout 2019. The OECD's composite leading indicator for China has actually improved for five straight months. Many of China's biggest companies -- like Alibaba (NYSE:BABA) and JD.Com (NASDAQ:JD) -- have actually reported better-than-expected numbers over the past few months.Meanwhile, on the auto front, we are seeing similar signs of a turnaround. Specifically, China's auto market has declined for 13 straight months, with many of those months posting sizable declines. But, in July, the market dropped only 4.3%, one of the smaller declines in recent memory. There has also been a push from the government to further support EV adoption in urban areas through the removal of certain auto purchase restrictions which have constricted demand.Overall, then, the economic data coming out of China broadly implies that this country's economy is finally starting to turn the corner, and that China's auto market is following suit. That's all great news for NIO stock. The Bad News For NIOThe bad news for NIO stock is that re-accelerated economic and auto market expansion in China might not create a tide which lifts all boats.The big, overarching problem with NIO is that it is one of 486 EV companies in China. You read that right. There are 486 EV companies in China. That's far too many. In America, there are no more than 20 to 30 electric vehicle companies. In the long run, as China's EV market matures, rationalizes, and consolidates, it will down-size to something very similar to the U.S. EV landscape -- or, about 25 EV companies.In other words, 95% of China's EV companies today, probably won't be around by 2030. Those aren't good odds for NIO.Current trends are similarly unfavorable. NIO's delivery volume peaked in the fourth quarter of 2018 at nearly 8,000 deliveries. Ever since, delivery volume has dropped … significantly. In the first quarter of 2019, NIO delivered less than 4,000 cars. In the second quarter, it delivered around 3,500 cars. This quarter, the company is on track to deliver about 2,500 vehicles. * 7 Stocks to Buy In a Flat Market In other words, from late 2018 to today, NIO's quarterly deliver volume rate has shrunk nearly 70% and that's with NIO launching a new vehicle in mid-2019.Those are ugly trends. Broadly, they imply that NIO may not have what it takes to last long term in China's auto market. So long as the trends support that thesis, NIO stock will remain depressed. Bottom Line on NIO StockLong term, NIO stock could go boom if the company does turn into the go-to premium EV brand in China's booming electrics market. But the data right now simply does not support this thesis. Instead, it supports the thesis that NIO will be among the 95% of China EV companies that ultimately goes bust instead of boom.As such, the best move right now with NIO stock is to wait-and-see. Wait for more numbers to come out of NIO and China. See if NIO's trends are improving, or not. If they are improving, buy into the rebound bid. If they aren't, continue to stay away until they do.As of this writing, Luke Lango was long BABA and JD. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell in Market-Cursed September * 7 of the Worst IPO Stocks in 2019 * 7 Best Stocks That Crushed It This Earnings Season The post Why There's No Rush To Buy Into NIO Stock appeared first on InvestorPlace.
HONG KONG/BEIJING, Sept 11 (Reuters) - China's second-largest e-commerce firm JD.com Inc has appointed Jason Hu, a former managing director at Chinese private equity firm CDH Investments, as head of strategic investment to oversee deals both at home and overseas. Hu, who joined the company in late July, was also named vice president reporting directly to Chief Strategy Officer Jon Liao. Filling the newly created role will beef up JD.com's investment arm which has long been dwarfed by in-house deal teams at bigger rival Alibaba Group Holding Ltd as well as tech peer Tencent Holdings Ltd.
HONG KONG/BEIJING (Reuters) - China's second-largest e-commerce firm JD.com Inc has appointed Jason Hu, a former managing director at Chinese private equity firm CDH Investments, as head of strategic investment to oversee deals both at home and overseas. Hu, who joined the company in late July, was also named vice president reporting directly to Chief Strategy Officer Jon Liao. Filling the newly created role will beef up JD.com's investment arm which has long been dwarfed by in-house deal teams at bigger rival Alibaba Group Holding Ltd as well as tech peer Tencent Holdings Ltd.
When it comes to investing, my focus is generally on the fundamentals. But sometimes the charts are just too obvious to ignore.Source: Michael Vi / Shutterstock.com This is the case with JD.com (NASDAQ:JD) stock. A glance at the chart shows that there is stubborn resistance between $30 and $31. This has been the case since early March.Now there should be a breakout -- whether on the upside or downside -- right? I think so. And my guess is that it will be on the upside.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIt's encouraging that the company has been able to overcome some of its challenges, particularly with CEO Richard Liu. Keep in mind that he had been the source of much drama. During a trip to Minnesota, he was accused of rape. Although prosecutors did not press sexual assault charges on Liu, he was later accused in an April 2019 civil lawsuit. He had also called some of his employees "slackers." This was in response to the emerging discontent in China with long work hours (known as "996," which refers to a six day work week that has a daily schedule of 9 a.m. to 9 p.m.).But the good news is that Liu has been able to keep a low profile lately. And let's hope this continues. The Pros and ConsI know there is a lingering issue: the U.S.-China trade war. This is certainly creating lots of uncertainty and weighing on growth.Yet the irony is that the situation may ultimately benefit JD.com. After all, the company is mostly focused on China's domestic economy. So as the government continues to juice up the stimulus, this should help with consumer demand. * 7 Best Tech Stocks to Buy Right Now Another key is that -- even with the falloff in trade -- the Chinese economy is still growing at a rapid clip of about 6% annually. Oh, and there are some other driving forces like these: * The middle class is forecasted to hit 600 million by 2022. * About 90% of the growth in gross domestic product is coming from domestic consumption. * By 2021, the e-commerce market is expected to go from $470 billion to $840 billion. The JD.Com StrategyNow JD.com faces intense competition. Its rivals are not just large players like Alibaba (NYSE:BABA) and Pinduoduo (NASDAQ:PDD). There are also an increasing number of fast-growing startups.Despite all this, JD.com has some important advantages. For example, the company has built a sophisticated supply chain and logistics infrastructure that allows for quick shipping. It's straight from the playbook of Amazon (NASDAQ:AMZN). Note that JD.com has major fulfillment centers in seven cities and about 600 warehouses. It also has geographic coverage in nearly all counties and districts in China.Next, JD.com has been smart to pursue an aggressive partnership strategy, which has helped leverage growth. It has a deal with Tencent (OTCMKTS:TCEHY) that boosted digital distribution, as well as a strategic investment from Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). JD.com has also entered a deal with Walmart (NYSE:WMT) that has provided much more brick-and-mortar coverage. The Bottom Line on JD StockNo doubt, JD.com has been very busy. And the latest quarterly report shows that its investments are starting to pay off. Revenues jumped by 23% to $21.9 billion, with strength in the categories of home appliances, electric devices and general merchandise. As for annual active customer accounts, there was an increase of 3.5% to 321.3 million. There was also an improvement in margins as the company continues to benefit from disciplined cost management and scale.These results, though, are probably not a one-off. Given the company's strengths, it does look like the growth momentum should continue. And yes, this should go a long way in helping JD.com stock break out of its range.Tom Taulli is the author of the book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 3 Artificial Intelligence Stocks to Buy * 7 Industrial Stocks to Buy for a Strong U.S. Economy * 3 Beaten-Down Bank Stocks to Buy and Hold for the Long Term The post JD.com Shares Look Ready to Break Out appeared first on InvestorPlace.
Alibaba Group (NYSE:BABA) is either a case of the glass being half empty or half full. Although worries obviously abound for Chinese equities, the technicals of Alibaba stock can be viewed as solid.Source: BigTunaOnline / Shutterstock.com On Thursday, the U.S. markets all surged . The three major investment indices were all in the black. Further, several companies in industries ranging from technology to oil rose meaningfully.But American stocks weren't the only ones benefiting from the bullishness. Perhaps surprisingly, BABA stock climbed strongly, gaining nearly 3% on the day.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBased on that move, Alibaba stock may seem like a solid buy. Plus, Alibaba's Group's peers, such as JD.com (NASDAQ:JD) and Tencent (OTCMKTS:TCEHY), have also enjoyed strong momentum. * 7 Industrial Stocks to Buy for a Strong U.S. Economy But although BABA stock is up big since hitting a bottom in early August, its Friday closing price of $17.69 should raise eyebrows.For one thing, $180 represented resistance three times between the beginning of July and the end of August. That BABA stock couldn't get past this level again is quite telling.Additionally, the U.S.-China trade war is still worrisome. While the markets are enjoying their rally, a Twitter (NYSE: TWTR) post from President Trump could derail everything. Thus, I'm not too wild about jumping aboard BABA stock. Is Another Turning Point Coming for Alibaba Stock?I'd like to make another point about the technical position of Alibaba stock. From the latter half of 2017 through July of the following year, the $180 level represented strong support. Since August of 2018, though, $180 has been strong resistance for BABA stock.Technically, then, BABA stock has reached a turning point.Two years ago, market analysts talked expectantly about the growth opportunities of Alibaba Group. BABA, after all, was a dominant e-commerce and technology player standing atop the world's biggest consumer market.Now the outlook has changed dramatically. Pessimists decry what could be an unnecessarily prolonged trade war that ends up severely hurting the top two global economies. Furthermore, if the U.S. suffers a recession, the ripple effect would again negatively impact both sides.But if the president's tweets push the markets higher, Alibaba stock could regain $180 and then climb meaningfully higher.But how likely is this scenario? In my view, it's not likely at all. Here's why: The Trade War Will Hurt BABA Stock in the Nearer TermTo understand the trade war requires having some knowledge of the battling sides. On the American side, the Trump administration has a vested interest in protecting intellectual property. From China's perspective, it's primarily interested in fully transitioning from a developing nation to a developed one.Meanwhile, over the last five years, Chinese President Xi Jinping has obtained comprehensive power. According to Fox News, Xi "is simultaneously general secretary of the Communist Party, president of China and chairman of the Central Military Commission."That was fine and well during peace time. But in the present context, Xi has a full plate. Not only is he warring with the Trump administration, but he must also control spiraling protests in Hong Kong. In all likelihood, he lacks experience with handling multiple, high-level crises.Thus, I think it's reasonable to assume that the Trump administration smells blood. And although the U.S. is hurting, we're probably damaging the Chinese economy more. For example, Chinese consumer confidence has steadily declined since February of this year. By contrast, U.S. consumer confidence has generally grown since earlier this year. I don't think the state of China's economy will help Alibaba stock.But that doesn't mean China will concede the trade war. In order to maintain power, Xi must regain credibility. That won't happen if he caves into America's demands. Given this situation, the economic conflict will likely extend into next year. Obviously, that's not positive for BABA stock. How to Approach Alibaba GroupAlthough Alibaba stock has enjoyed a resurgence recently, I don't think the rebound has inspired much confidence in BABA. As I noted, the trade war is a problem, and neither side is likely to give much ground. Until a resolution is found, both the American and Chinese economies will suffer. However, Chinese consumer sentiment has taken a hit, which bodes poorly for Alibaba Group.Additionally, a number of factors suggest that the U.S. may suffer a recession. If a recession does occur, BABA stock would probably drop. Although the Chinese economy is robust, it's also dependent on exports. Thus, if the U.S. economy weakens, it might take China down with it.Ultimately, I think the risks facing BABA stock outweigh its potential rewards. While the recent moves by Alibaba stock may have encouraged the bulls, the rebound hasn't removed longer-standing concerns.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Deeply Discounted Energy Stocks to Buy * 7 Stocks to Buy In a Flat Market * 10 Stocks to Buy to Ride China's Emerging Wealth The post With Alibaba Stock, the Risks Simply Outweigh the Rewards appeared first on InvestorPlace.
Buying a low-cost index fund will get you the average market return. But if you invest in individual stocks, some are...
The old saying goes: When America sneezes, the world catches a cold. As the world's largest importer - and holder of its largest trade deficit by a country mile - the United States is the planet's indispensable economy. And emerging-markets stocks, with their dependence on foreign capital and high concentration in cyclical and commodity sectors, are particularly vulnerable to weakness in the U.S.There's nothing quite like a good trade war to give investors the jitters. But it's not just the ongoing spat between Presidents Donald Trump and Xi Jinping that has investors unnerved. U.S. economic growth appears to be topping out for this cycle, and issues in the American market have a way of spilling across borders.When western investors go into de-risking mode, they tend to throw out the baby with the bathwater, dumping high-quality emerging-markets stocks in a flight to cash. But in doing so, they often create fantastic buying opportunities.Jeremy Grantham and his colleagues at Boston-based asset manager GMO are not known for being wide-eyed Pollyannas. They're sober value investors best known for calling the last two major bear markets in 2000 and 2008. Perhaps not surprisingly, Grantham & Co. see U.S. stocks performing poorly over the next seven years, losing 3.7% per year. But interestingly, GMO expects emerging-markets stocks to return 5.2% per year over the next seven years. Even more interestingly, they see EM value stocks returning 9.8% per year.Today, we're going to look at 10 strong emerging-markets stocks that might give you a bit of heartburn, but ultimately should weather the trade war and reward new money. Most depend heavily on domestic EM consumers rather than on exports or trade flows, and all should be considered potential buys on any weakness in the coming months. SEE ALSO: The Berkshire Hathaway Portfolio: All 47 Buffett Stocks Explained
Analysts are debating whether the volatility and general market weakness in the markets will continue in September. Today, I would like to discuss the prospects of JD.com (NASDAQ:JD), China's largest eCommerce company by revenue. Year-to-date, JD stock is up over 45%.Source: Michael Vi / Shutterstock.com In other words, despite the trade war, Chinese consumers are spending money. Currently, the JD.com share price is hovering at around $30. I believe this level will continue to act as resistance in the coming weeks. Let us take a look at how the rest of the year may shape up for JD stock. How JD.com Stock Makes MoneyJD.com, a member of the Fortune Global 500, offers investors the possibility to invest in the growing Chinese consumer economy. Online shopping represents about 35% of China's total $5.5 trillion retail market, and JD.com has a 25% share of the online retail market.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe group also has hundreds of warehouses and thousands of delivery stations as well as fresh food stores across China. JD takes on inventories and handles logistics as a direct retailer. This approach requires more capital and higher costs. However, it also enables JD.com to have more control over the customer experience than its rivals, including Alibaba (NYSE:BABA) and Pinduoduo (NASDAQ:PDD).In August 2018, JD.com and Walmart (NYSE:WMT) jointly invested $500 million into Dada-JD Daojia, an online-to-offline grocery business which is part-owned by JD.com. In other words, the group is aiming to differentiate itself from the competition by investing heavily in its logistics business. * 7 Best Tech Stocks to Buy Right Now Moreover, JD also makes money from third-party sales of other merchants that use JD's massive warehouse and logistics operations.On Aug. 13, JD.com reported Q2 earnings and showed healthy growth. Its non-GAAP quarterly earnings came in at 0.36 Chinese yuan, or 5 cents per U.S.-listed share. JD.com stock's net revenues increased by 23% to hit 150.28 billion Chinese yuan, or $21.28 billion.Management highlighted the fact the eCommerce platform saw rising demand for big-ticket items, such as electronics and home appliances.In the last quarter, JD.com's number of annual active customers, i.e., those who made a purchase over the past year, grew 2% to reach 321 million. Investors also noted that Prada, the leading Italian fashion house, agreed to open first-party flagship stores on JD.com.Although management did not provide any bottom-line guidance for Q3, JD.com expects revenue to increase by 20%-24% annually in the third quarter. JD.com Faces Competition in ChinaJD.com faces increasing competition from other Chinese companies. Its main rival is Alibaba, whose Tmall and Taobao platforms are China's largest online business-to-consumer and consumer-to-consumer marketplace, respectively.When BABA stock announces its quarterly results, there is always a corresponding big move in the price of JD.com stock, too. As of the end of Q1, Alibaba has over 727 million monthly active users (MAUs) and is in the lead in China.Pinduoduo is also increasing its marketshare in the country. It a young eCommerce platform that focuses on group buying. PDD stock has recently reported strong Q2 results and the stock has seen new highs as a result. At the end of Q1, its MAU numbers were almost 300 million. Many analysts now believe that Pinduoduo, the underdog, is on the road to catch up to both JD.com and Alibaba.JD stock is a growth name that trades on forward sales as well as the momentum provided by future expectations. In the past few months, China's industrial and manufacturing sectors have contracted. Yet analysts are hoping that consumer spending will continue to hold up well. Therefore the uncertainty regarding the Chinese economy may continue to affect investor sentiment in the short-run.On a final note, I am a bit concerned about JD.com stock's quick ratio of 0.91. This ratio demonstrates the ability of the company to cover short-term liquidity needs.In other words, the group may be in a somewhat difficult position to weather any serious headwinds due to an economic slump in the short-term. As a comparison, Alibaba stock's current ratio stands at 1.38. Long-Term Catalysts for JD.com StockIn June 2018, Alphabet's (NASDAQ:GOOG, NASDAQ:GOOGL) Google announced that it would invest $550 million in JD.com. Both companies stated that the combined synergies would enable them to collaborate on various eCommerce and technology-related areas.Under the agreements, Google received "27,106,948 newly issued JD.com Class A ordinary shares" at a price that equated to "$40.58 per American depository share." This cooperation between the two companies is likely to benefit both of them in the years to come. Yet so far, JD stock price hasn't shown any benefit.Although the Chinese economy may slow further in 2019 or 2020, China's GDP is still expanding at an average annual rate of at least 6%. Recessions hurt consumers in general, but they don't outright kill consumption. China's growing middle class will continue to drive increases in the country's consumer spending and the expansion of China's eCommerce market. When Chinese citizens have more disposable income, they can spend more money on online shopping sites like JD.com.China's economic fundamentals have vastly improved over the past decade. The internet population is still booming. And money continues to pour into Chinese companies operating in this space. These factors are likely to help support the long-term durability of JD stock.On Aug. 12, JD share price closed at $27.16. On Aug. 19, the stock hit a recent high price of $32.28. In other words, Wall Street was clearly pleased with the recent earnings results. Investors now seem more confident that in quarters to come, JD.com will continue to grow its revenues and the bottom line. So Should Investors Buy JD Stock in September?JD stock and many of the other Chinese companies listed on U.S. exchanges enable investors to benefit from growing Chinese consumer spending. However, the next several weeks may bring more volatility in JD shares. And I do not expect to witness a major favorable sentiment shift toward Chinese stocks.In the next few weeks, trading in JD stock is likely to be choppy with both widely up and down days. JD.com shares are likely to trade between $25 and $30.Short-term investors should be ready for daily price swings in these Chinese stocks such as JD. Long-term investors may see any further price declines as opportunities to go long.I think JD.com is still one of the best stocks China has to offer, and it could easily find a place in investors' portfolios if they're in it for the long haul. Within a few years, I expect JD stock to easily reach the lower $40's level, or the price Google paid for the shares in 2018.As of this writing, the author did not own shares in any of the companies mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Best Tech Stocks to Buy Right Now * 10 Mid-Cap Stocks to Buy * 8 Precious Metals Stocks to Mine For The post JD Stock Is in a Holding Pattern for Now, but It Won't Last Forever appeared first on InvestorPlace.
JD.com (NYSE:JD) reported its second-quarter earnings August 13. They were better than expected sending JD stock up by more than 8% on the news. Unfortunately, it's gone sideways ever since. Source: Michael Vi / Shutterstock.com JD traded at $50 as recently as January 2018. It fell all the way to $19 that year on allegations CEO and founder Richard Liu raped a 21-year-old student in Minnesota. Although charges were never laid, JD stock's never fully recovered from the fallout. And the trade war between the U.S. and China didn't help its cause. As for the business, the latest quarterly results suggest it is starting to turn the corner. However, despite the positive earnings surprise and being up 47% year to date through August 29, JD stock's gotten stuck at $30.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSo, investors are left wondering if JD.com is a $30 or a $50 stock. Here are my arguments for both stock prices. JD.com is a $50 StockInvestorPlace contributor Laura Hoy recently wrote that JD's work to build its logistics work is starting to pay off for the company as it gets higher-margin, third-party e-commerce revenues. Furthermore, as the company's gotten involved in the digital advertising space, margins have jumped higher. One only needs to look at the growth Amazon (NASDAQ:AMZN) is experiencing from its foray into digital advertising to know that it's a lucrative endeavor. eMarketer estimates that Amazon's U.S. ad business will grow 53% in 2019 to $11.3 billion. So, what's JD.com's ad business look like at the moment?JD doesn't separate its ad revenue. It's included with the fees the company generates from third-party sellers using its marketplaces. In the first six months of 2019, marketplace and advertising revenues were $2.8 billion, 25% higher than a year earlier. During its Q2 2019 conference call, CFO Sidney Huang did say that the company's 42% increase in net service revenues during the quarter were "driven by strong momentum from third-party logistics and advertising revenues."Although its net services revenue only accounted for 11.2% of its overall revenue, the margins are much higher than those for its own ecommerce sales. More importantly, a number of analysts were asking questions about its advertising business during the Q&A after the conference call. You can be sure that they will continue to pester the company for greater detail. Investors should continue to pay attention to this aspect of its business. Like Amazon, it will be bigger than most realize. One of the reasons I prefer Alibaba (NYSE:BABA) over JD is because of the free cash flow it generates.Well, in the first six months of the year, JD had $2.8 billion in free cash flow on $39.5 billion in revenue for an FCF margin of 7.1%. In Alibaba's first quarter ended June 30, it had free cash flow of $3.8 billion on revenue of $16.7 billion for an FCF margin of 22.8%. Clearly, JD can't hold a candle to Alibaba, but if it continues to grow the services side of its business, I could see the gap tightening. JD's headed in the right direction. JD.com is a $30 StockJD is making headway in its business. There's no question. However, the volatility of its free cash flow makes its stock awfully difficult to commit to. In the second quarter, JD had a 40% increase in its free cash flow to $2.7 billion. That's an impressive figure. What you might not notice about the jump in free cash flow is that a big chunk of it came from the sale of some of its logistics and real estate properties. Otherwise, its free cash flow wouldn't have been nearly as high. Until JD generates consistent free cash flow, its stock isn't nearly as attractive as BABA's. That's especially true if the trade war drags on well into 2020. Other than its inconsistent free cash flow generation, there's very little to say that's negative about JD.com. The Bottom Line on JD StockInvestorPlace's Will Healy recently stated that JD has tested $26 twice this summer. On both occasions, it's bounced higher. He believes you should wait for a third-time lucky. I believe he's right. Is JD a $30 or $50 stock?It's a $50 stock disguised as a $30 stock. Once a trade agreement is reached, $50 will be easy pickings.At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Best Tech Stocks to Buy Right Now * 10 Mid-Cap Stocks to Buy * 8 Precious Metals Stocks to Mine For The post When the Trade War Ends, JD Stock Has a Clear Shot at $50 appeared first on InvestorPlace.
2019 has not been good to Nio (NYSE:NIO). Sales have been underwhelming. The company continues to burn cash. And the NIO stock price has plunged, dropping 55% so far this year and declining 70%+ from early March highs. In today's trading alone, it's down 5.8% as of this writing.Source: THINK A / Shutterstock.com The pressure has continued of late after a brief rally in July. But, to be blunt, it really should be worse. Bad news is mounting. Nio's very viability seems at risk in the near term. And there's an important question at the moment that hasn't been answered.NIO might seem cheap. The stock, as noted, has pulled back sharply. It trades below $3. As bulls are wont to argue, Nio is the "Tesla (NASDAQ:TSLA) of China" -- yet is valued at less than one-tenth its U.S. counterpart in terms of market cap.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Stocks to Buy for September But NIO isn't cheap. The market still values the company around $3 billion including net debt. There's little reason for even that valuation, particularly amid increasingly concerning news. This is a significantly challenged company in a hugely competitive market with macro worries layered on top. It can, and likely will, get worse for Nio. A Bad Month for Nio, and the NIO Stock PriceSince August 2, the NIO stock price has fallen 17.4%. It's declined 32.5% from intraday highs on July 10. Again, it really should be worse.Indeed, the news surrounding the company over the past month or so has been dreadful. From a macro standpoint, there's been no progress on the trade war front. And the yuan was devalued in early August, making Nio's eventual profits (if they arrive) less valuable to U.S. investors. Chinese macro concerns remain, leading to volatility in even more established plays like Alibaba (NYSE:BABA) and JD.com (NASDAQ:JD).From a company-specific perspective, the news in August was even worse. July deliveries of just 837 vehicles disappointed. The 'retirement' of Nio's co-founder followed two other key executive exits the month before. A week later, the company announced it was laying off 1,200 employees -- nearly 14% of its workforce.None of those news items suggest a growth company, which Nio has to be. The NIO stock price, after all, is still ~2x revenue (again, including net debt). That might sound cheap -- but for a sharply unprofitable automotive company that doesn't even manufacture its own vehicles, it's not.Rather, this sounds like a company that needs to save cash, has serious strategic questions, and isn't selling nearly enough cars to come close to covering its expenses.That in turn undercuts the argument that a trade war resolution somehow fixes Nio's problems. There are 486 electric vehicle manufacturers in China, as Bloomberg noted earlier this year. That's a competitive issue not a temporary geopolitical problem. Where Are Earnings?After all that bad news, there's one odd piece of 'no news' at the moment: Nio's second quarter earnings. Nio reports on a calendar basis. But more than two months after its quarter ended, the company still hasn't even announced an earnings release date.To be sure, that doesn't necessarily mean anything nefarious. Bitauto (NYSE:BITA), also founded by Nio co-founder Bin Li, isn't reporting until Thursday. But it does seem to suggest that at the least Nio doesn't have much good news to report. It may also be that the company is working toward something else -- perhaps a financing -- before the release.Again, this is a company whose current burn rate suggests it may have less than a year's worth of cash remaining. That rate should moderate after the layoffs, to be sure. But any uncertainty for this kind of company seems like bad news. And it's possible, with more trade war drama over the Labor Day weekend, that the lack of an earnings release will lead to more questions - and more selling. Sell NIOWherever an investor looks right now, the news seems to be negative for NIO stock. The simplistic bull case here -- that Nio can benefit from EV growth in China, particularly on the high end -- in theory can still play out.But industry leaders don't lay off 13% of their employees. Co-founders don't 'retire' to go work for a supplier. Earnings reports are released on time. * 7 Best Tech Stocks to Buy Right Now This is not the story that some bulls seem to think that it is. And at a market cap of $3 billion, that problem still isn't priced in.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Best Tech Stocks to Buy Right Now * 10 Mid-Cap Stocks to Buy * 8 Precious Metals Stocks to Mine For The post Nio Stock Is Extremely Cheap -- But It Should Be Cheaper appeared first on InvestorPlace.
(Bloomberg Opinion) -- If the trade war's objective is to even the playing field for American firms, President Donald Trump isn't going about it the right way. China’s easy access to U.S. dollars over the past decade has fueled asset bubbles, driven an overseas debt binge and laid the groundwork for its low-cost, export-driven economy. Only cutting off the supply of cheap money will reverse this.So while Trump is pressuring Federal Reserve Chairman Jerome Powell to cut interest rates – questioning the central bank chief's patriotism and calling him "a bigger enemy than Xi Jinping" – the way to wring equitable behavior out of China is for the Fed to hold the line.Fundamentally, money will go where it can find yield. And however much capital the world has to spare, China has shown an appetite to absorb it. During the most expansive years of quantitative easing in the U.S., foreign money seeking yield went into China labeled as "trade" and "investment."From 2009 to 2014, China may have taken in as much as $2 trillion in hot money spewing from the Federal Reserve's low interest-rate policy. My company looked at just one measure – the over-invoicing of exports via Hong Kong – in just one year, 2013, and found $390 billion of such flows into China.Since Beijing's capital controls, at the time, aimed to shut out foreigners eager to bet on a steadily strengthening yuan, speculators looked for bypasses: For example, some trading companies in China would inflate the value of their exports, enabling more money to enter the country as “export receipts.” Exaggerated foreign direct investment was also a popular channel for incoming speculative money, as was debt.China’s economic story begins and ends with liquidity; with so many dead assets that have to be refinanced every year, the country requires an ever-growing supply of capital. Much more than cheap labor, this cheap capital is what has created bargain-basement export goods. It also fosters anti-competitive behavior. Domestic companies can operate at a much lower cost than their U.S. counterparts, and they are rewarded in capital markets, despite growing evidence of intellectual-property theft.Consider what a decade of near-zero interest-rate policy has done for China:IPOs: Chinese companies listed in the U.S. now have a value of about $890 billion. Not even the high-profile delistings and fraud charges against China MediaExpress Holdings Inc. and Sino-Forest Corp. could drain the hype for the IPOs of Alibaba Group Holding Ltd., JD.com Inc. and Vipshop Holdings Ltd. Bonds: Investors hungry for yield have lapped up bonds issued by China's riskiest companies. That's enabled firms such as junk-rated China Evergrande Group, one of the country's most indebted developers, to continue tapping U.S. markets. Chinese firms have raised more than 90% of the high-yield Asian dollar debt issued this year. Mainland developers have about $110 billion in offshore junk-rated debt outstanding. Dumping: A steady flow of dollars into China fueled an investment splurge that supported the manufacturing of ultra-cheap exports, from DVD players and TV sets to solar panels. China's history of leniency toward borrowers – its first onshore default was in 2014 – meant firms were able to sell their goods at cut-rate prices without worrying about how they'd pay back their loans.All this means that the best way to curb Chinese excess is to limit the availability of the dollar. Trump’s demand that Powell cut rates by one percentage point is counterproductive to what appears, anyway, to be the goal of the trade war. There are other, more targeted measures that the U.S. can pursue in tandem. These include: Halting new Chinese IPOs in the U.S. American regulators have already ramped up scrutiny over such listings, which have tumbled to $2.8 billion so far this year compared with $29.1 billion in 2014. The U.S. needs to close the door to all share sales until China agrees to enable investigation and prosecution of fraud by listed companies. Requiring that American auditors and stock regulators have access to the audit papers of Chinese companies that are part of U.S.-listed entities, under penalty of delisting. The Public Company Accounting Oversight Board, a Washington-based non-profit that scrutinizes audits, also should be permitted to review its members in China, a goal the Securities and Exchange Commission highlighted in recent commentary. Taxing incoming Chinese (and other foreign) investment. U.S. Senators Tammy Baldwin and Josh Hawley in late July submitted a bill that would allow the Fed to impose a flexible tax on capital inflows. This measure would make it less attractive to park money in U.S. assets, thereby shrinking the capital account imbalance, and by extension, the trade deficit.Depending on whether Trump gets his rate cut, China’s slowdown will be fast or slow. By enabling new stimulus, cheap dollars would give the Chinese more rope to hang themselves with. Holding the line will mean Chinese austerity and unemployment. In that case, there would be no way out of economic recession other than an ambitious program of economic reform.To contact the author of this story: Anne Stevenson-Yang at firstname.lastname@example.orgTo contact the editor responsible for this story: Rachel Rosenthal at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Anne Stevenson-Yang is co-founder and research director of J Capital Research Ltd., a provider of investment advisory services.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.