|Bid||28.27 x 1800|
|Ask||28.35 x 4000|
|Day's Range||27.48 - 28.87|
|52 Week Range||19.21 - 42.72|
|Beta (3Y Monthly)||1.32|
|PE Ratio (TTM)||192.24|
|Earnings Date||Aug 14, 2019 - Aug 19, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||33.23|
Shares of Chinese e-commerce giant JD (NYSE:JD) have been in bounceback mode in early 2019 for one very simple reason: the narrative surrounding JD stock has changed dramatically -- for the better -- over the past several months.Source: Daniel Cukier via FlickrSpecifically, over the past several years, the narrative surrounding JD stock has been one defined by rapidly decelerating revenue growth and profit-margin erosion, which led to concerns surrounding the company's long-term profit growth potential. As those concerns grew, JD stock dropped. From $50 in early 2018, to $20 by late 2018.But that slowing growth, compressing-margin narrative has changed course over the past several months. JD's revenue growth rates have started to stabilize in the 20% range. Profit margins have begun to expand meaningfully. Management expects both of those trends to persist for the foreseeable future. Thus, clarity and optimism have been injected into this company's long-term profit outlook. That dynamic has ultimately propelled JD stock 30% higher in 2019.InvestorPlace - Stock Market News, Stock Advice & Trading TipsJD stock will stay in rally mode for the foreseeable future. This new narrative implies that JD has big long-term profit growth potential. That big long-term profit growth potential still isn't fully priced into shares. Hence, JD stock has runway to head even higher over the next several months. * 7 Top-Rated Biotech Stocks to Invest In Today How much higher? The fundamentals say JD stock has runway to levels north of $30. Consequently, I'm staying bullish on this stock until it crosses above $30. The Narrative Has Changed for the BetterWhen it comes to JD, the big-picture narrative is pretty straightforward.You basically have the Chinese version of Amazon (NASDAQ:AMZN), which operates a giant e-commerce business in China's rapidly expanding and urbanizing consumer economy. Much like Amazon, JD operates that e-commerce business at slim profit margins, but the long-term plan is to win market share and then leverage scale to meaningfully expand profit margins. Also, much like Amazon, JD has jumped into multiple tangential growth verticals -- like logistics -- and while those businesses operate at poor margins today, they too will eventually scale into much more profitable operations.Because the long-term plan follows the Amazon roadmap and does pave the path for huge profit growth at scale, JD stock soared in early 2018 to $50.But that long-term plan was called into question throughout 2018, as the company's growth rates decelerated and margins failed to expand with scale. Specifically, from the end of 2017 to the end of 2018, revenue growth dropped from ~40% to ~20%. Meanwhile, operating margins were sliced in half from 0.8% to 0.4%. As investors questioned the long-term profit trajectory, they sold the stock, and shares of JD fell all the way to $20.In early 2019, though, the narrative has changed course. It once again supports huge profit growth at scale. Revenue growth has stabilized over the past two quarters around 20%, and projects to stay at 20% next quarter too. Meanwhile, operating margins expanded 70 basis points in the fourth quarter of 2018, and 80 basis points in the first quarter of 2019.Thus, the Amazon roadmap of sustained big revenue growth on top of margin expansion is once again the underlying trend at JD. This underlying trend ultimately supports JD stock shooting above $30 soon. JD Stock Has Good Upside PotentialThe numbers supporting JD stock look pretty good at the moment.You have a 20%-plus revenue growth company with growth that projects to stabilize around the 20% mark for the foreseeable future. At the same time, you have operating margins that are hugely depressed, hugging the flatline, making huge upward progress in early 2019, and which project to keep heading higher over the next several years. Thus, for the foreseeable future, JD projects as a big revenue-grower on top of big margin expansion, which should drive doubly big profit growth.That's why analysts see EPS essentially doubling this year, rising by 50% next year, and rising another 35% the following year. Net net, analysts think this is a 45% annualized profit-grower over the next several years. JD stock trades at less than 40 times forward earnings.A 40 forward multiple for 45% profit growth is an attractive combo. If you model that out, EPS should get to around $2.20 by fiscal 2023, from $0.34 in fiscal 2018. High quality retailers, like Walmart (NYSE:WMT), tend to trade around 20 times forward earnings. Based on that 20 multiple, a reasonable fiscal 2022 price target for JD stock is $44. Discounted back by 10% per year, that equates to a fiscal 2019 price target of roughly $33.Thus, this rally in JD stock has fundamentally supported runway to above $30 in 2019. Bottom Line on JD StockThe narrative surrounding JD stock has completely changed over the past two quarters. This new narrative -- defined by stable revenue growth and big margin expansion -- once again supports robust profit growth at scale. * The 10 Best Index Funds to Buy and Hold This robust profit growth is not fully priced into JD stock, yet, and the stock has fundamentally supported runway to levels above $30 in 2019.As of this writing, Luke Lango was long JD, AMZN, and WMT. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 7 Best Tech Stocks to Buy for the Second Half of 2019 * 7 Top-Rated Biotech Stocks to Invest In Today * 4 Semiconductor Stocks to Sell Compare Brokers The post Why JD Stock Has the Potential to Trade Above $30 appeared first on InvestorPlace.
Investors should exercise caution investing in companies that are both losing money and are listed in China. Such is the case with iQIYI(NASDAQ: IQ). Escalating trade wars between the U.S. and China scared investors away from China-based companies and that move has been costing iQIYI stock.Source: Shutterstock Even after JD.com (NASDAQ: JD) and Alibaba Group (NYSE: BABA) reported solid quarterly sales growth, the stock failed to return to yearly highs. So, with iQIYI reporting first-quarter revenue growth of 43% but a loss of around $270 million, what is there to like about this company?iQIYI's subscriber base grew an impressive 58% to 96.8 million, up from 61.3 million last year. Revenue grew 43% but net losses doubled to around $270 million. The company effectively strengthened its platform with user growth and attracted new users, increasing overall user stickiness in the quarter.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 Both DAU on the mobile app and time spent grew in the double digits, demonstrating effective marketing campaigns and premium content resonating with users. The Legend of Haolan, The Golden Eyes and The Legend are examples of premium, high-quality original drama driving subscriber growth.iQIYI's secondquarter revenue guidance of 6.91 billion - 7.29 billion yuan (USD $998 million - $1.05 billion), up 12-18% Y/Y is disappointing investors with a short-term time horizon. Revenue growth lags with the subscriber additions. If the time spent per user increases, expect iQIYI reporting higher revenue later this year.Still, the company reported ad revenue remaining largely flat compared to last year. It is maintaining a cautious outlook, factoring the macroeconomic weakness in China that is driven by the ongoing trade disputes. Opportunity in iQIYI StockiQIYI's self-produced content, premium content, and ad solution should keep a positive business momentum despite the macro headwinds ahead. Viewership should grow, driven by advertising initiatives to attract new subscribers. IQIYI is building multiple business engines to diversify.Its gaming business performed well in the first quarter while its content unit will incorporate more Chinese cultural values. The richer its content library gets, the wider an audience iQIYI will attract.IQIYI is exploring the prospects of 5G with China Unicom. It launched an 8K VR visual experience center in March. Its "Qisubo" service integrates CDN technology with 5G Mobile Edge Computing and ensures high frame rates for videos having lots of interactivity. As Qisubo matures, its service may be used in hotels, high-speed trains, airports, universities, and anywhere high-quality video content is displayed. Headwinds for iQIYI StockWith all the strong growth prospects ahead, investors cannot ignore the growing expenses and quarterly loss. SG&A expenses rose 62% in the first quarter, primarily due to higher marketing spend and increased share-based compensation. R&D costs, which rose 54%, is expected for a technology firm that must invest to stay ahead.Falling content costs could offset the other expense increases. Policy changes and regulatory censorship may have contributed to its 20% sequential drop in content costs in Q1. Looking ahead, the company expects steady content costs for the second and third quarter.Subscriber growth outpaced competitors but could slow if its peers counter iQIYI's successful initiatives. Still, strong original content and variety shows like Idol Producer resonate well with viewers.Revenue from advertising could continue lagging as the trade war remains unresolved. On the flip side, a resolution between the U.S. and China would lead to a strong rally in IQ stock. Investors will anticipate a rebound in ad revenue as trade levels rebound and the economy in China strengthens. Valuation and Your Takeaway on iQIYI StockIQ stock is getting close to its IPO price of 2018. Analysts are cautious of the stock's upside, predicting a gain of just 9%. In a five-year DCF revenue exit model, iQIYI needs revenue growing 25% annually to justify a fair value of $20.50. But after the stock fell almost 30% in the last quarter, the selling momentum needs to subside before the stock has any chance of drawing buyers again.Ideally, the U.S. and China resolve their trade dispute differences. If they do not, the stock will underperform. And since fundamentals are strong for the long-term, investors willing to hold the stock for more than a year should consider iQIYI at these levels.Disclosure: As of this writing, the author did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 * 7 Value Stocks That Are Flying Under the Radar * 6 Mouth-Watering Fast Food Stocks for Growth Investors Compare Brokers The post Subscription Numbers Make iQiyi Stock Look Like a Great Buy Here appeared first on InvestorPlace.
Chinese e-commerce giant JD.com Inc may list its logistics unit in the future but it currently has no clear plan, a senior company executive said on Monday. Bing Fu, head of planning and development at JD Logistics, made the comments to reporters on the sidelines of a media tour.
Chinese e-commerce giant JD.com Inc may list its logistics unit in the future but it currently has no clear plan, a senior company executive said on Monday. Bing Fu, head of planning and development at JD Logistics, made the comments to reporters on the sidelines of a media tour.
When the U.S. backed off from imposing tariffs on Mexico, investors became more optimistic about the Trump administration reaching a deal with China. So it's not surprising that China-based stocks have rallied nicely in the last week, enough to suggest that investors should look at them again.Source: Shutterstock And while JD.com, Inc. (NASDAQ: JD) and Alibaba Group Holding Limited (NYSE: BABA) are both compelling China-based stocks, Alibaba stock has more potential to reward investors. * 7 High-Quality Cheap Stocks to Buy With $10 Alibaba's $20 Billion of Extra LiquidityOn May 28, Reuters reported that Alibaba would raise $20 billion through a Hong Kong listing of Alibaba stock. The additional liquidity gives the e-commerce giant some insurance against risks associated with the U.S.-China trade war. If BABA delists Alibaba stock from the U.S. market, it will still have plenty of cash on its balance sheet, and BABA stock will still be publicly traded, albeit in Hong Kong.InvestorPlace - Stock Market News, Stock Advice & Trading TipsListing Alibaba stock on the Asian exchange also prevents Americans' animus towards China from holding down the valuation of all BABA stock. In New York, Alibaba stock trades at a forward price-earnings ratio of 18.6, even though analysts, on average, expect its earnings per share to jump 36% this year.Alibaba does not need the $20 billion from listing Alibaba stock in Hong Kong. At the end of last quarter, (BABA's fiscal fourth quarter) the company had cash, cash equivalents, and short-term investments of $28.8 billion. To increase shareholder value, the company bought back 10.9 million shares of Alibaba stock for $1.6 billion. Looking ahead, Alibaba expects its top line in FY 2020 to come in at $28.9 billion (RMB 500 billion). Expect the company to use some of its cash to buy back more shares of Alibaba stock this year. Solid Q4 Earnings GrowthIn Q4, Alibaba's total revenue jumped 51% and its EPS came in at $1.20, outpacing analysts' consensus estimate by 33 cents. The company will become more profitable as its innovative initiatives strengthen its digital media, entertainment, and cloud-computing businesses.Instead of buying Amazon.com (NASDAQ: AMZN) stock to gain exposure to the growth of Amazon's cloud business, investors can buy Alibaba stock, which has a much lower price-earnings multiple than AMZN stock. BABA's cloud-computing revenue surged 76% last quarter, and Alibaba is the leading cloud service provider in China and faces no real competition there. Conversely, Amazon.com's AWS may eventually face growing competition from Microsoft's (NASDAQ: MSFT) cloud business, Azure.To convince investors that Alibaba's cloud business will eventually meaningfully raise its bottom line, the unit must first report positive EBITDA margins. Although the unit's EBITDA was negative 2% in Q4, that's an improvement over the negative 8% it posted during the same period last year. Still, more customers are signing on to Alibaba Cloud, and the unit's operational costs will fall as its revenue rises Meanwhile, Alibaba generated $1.6 billion in non-GAAP free cash flow despite its investments in Alibaba Cloud. Alibaba Stock Is UndervaluedAlibaba stock should trade closer to its 52-week high of $211. Instead,BABA stock price is around $161. Investors are still discounting Alibaba stock instead of rewarding it for the continued growth of Alibaba's customer base. In Q4, its customer base surged 77% year-over-year. Markets are clearly nervous about the U.S.-China trade war. But BABA's China retail business will likely continue to grow, despite the ongoing macro headwinds.On June 11, China's local governments introduced new stimulative infrastructure spending initiatives to offset the impact of U.S. tariffs on the Chinese economy. BABA's China-based businesses should be relatively resilient to the trade war, so the stimulus should cause the company's revenue growth to accelerate in the next few quarters. Valuation and the Bottom Line on Alibaba StockThere's little reason to doubt that BABA's revenue growth will be at least 20%. Based on a 5-year DCF Growth Exit model, Alibaba stock has a fair value of over $200 per share.BABA stock price bounced back from $150 to almost $161 in June. As investors speculate on the U.S.- China trade talks slated to take place at the next G20 meeting at the end of this month, expect the rebound of BABA stock price to continue.As of this writing, the author did not own shares of any of the companies mentioned in his column. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 High-Quality Cheap Stocks to Buy With $10 * 7 U.S. Stocks to Buy With Limited Trade War Exposure * 6 Growth Stocks That Could Be the Next Big Thing Compare Brokers The post Alibaba Stock Is Poised to Rise appeared first on InvestorPlace.
Despite the ongoing trade war with the U.S., investors shouldn't be ignoring companies in China. To the contrary, here are three that could be worth buying.
Farfetch Ltd (NYSE: FTCH ) has announced the launch of its business on JD.Com Inc (NASDAQ: JD ) in China about six months ahead of schedule. The Analysts Wells Fargo’s Ike Boruchow maintained an Outperform ...
Asian Markets Turn Bearish as China Says It's Not Afraid to FightTrade war here to stay?Yesterday, Asian markets largely shrugged off Trump’s comments about imposing fresh tariffs if he and Xi Xingping don’t meet in China. Markets in fact rose
Chinese stocks are showing signs of recovery after additional economic stimulus. Position for further gains using these trading tactics.
Alibaba (BABA), JD.com (JD), Baidu (BIDU), and NetEase (NTES) all opened Tuesday up over 2%, with Baidu jumping the most, over 4%.
What a difference six months can make. JD.com (NASDAQ:JD) stock is down 30% in the past couple of years. But therein lies an opportunity to ride the upswing momentum now going into the summer.Source: Daniel Cukier via FlickrYes, JD stock has been sliding for a while, but lately the tide has been changing. Year-to-date, it's up 30%, which is double the performance of the S&P 500. Clearly, the bulls are setting a tradeable bottom. In early March, and after a strong earnings report, I wrote about the bullish opportunity in JD. The trade worked well for a while, then the geopolitical rhetoric soured all equities in a big way.We went from almost having an imminent trade deal between China and the U.S. back to being at square one. Stocks like JD are sensitive to the political rhetoric because, like Apple (NASDAQ:AAPL), it sits in the line of fire.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut there is good news to surmise from the price action. First is that the JD stock bulls are not dead. They succeeded in setting higher highs. Sure they failed after hitting prior two accident scenes at $30 and $32 per share but that is part of normal price action. * 7 Stocks to Buy for the Coming Recession Once a stock revisits a ledge from which it fell hard, it finds sellers. So it's natural it works through those orders before it continues higher. But it is important that the bulls hold support levels so they don't have to reestablish their footing.In this case, JD.com stock held the $25.50 zone. This was important because it served as the neckline for the late February breakout. It is normal for a stock to revisit the neckline from which it last broke out to test its strength. Bulls now know that they can rely on it as solid footing.It is also important to note that this happened without any China deal hopium and in spite of the bad news. This lowers the JD risk that if the Trump / Xi meeting fails in a few weeks. It is still vulnerable because this is not a cheap stock.To that point, JD sells at an price-to-earnings ratio of 80. This is almost three times more expensive than Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Facebook (NASDAQ:FB). This is Amazon (NASDAQ:AMZN) P/E territory, but without the substance that AMZN brings. So JD stock has a lot of potential froth to shed should Wall Street have another tizzy. How to Approach JD StockThis is not the same as saying the stock is too expensive nor is it a judgement of its potential. I am merely pointing out the downside risk if the outside factors cause another selling equity wave. It would whirlwind JD into another test of support. If it fails this time, it could target $22 per share. I am in no way calling for this scenario as my base case, but I am pointing out the possibility.These are nervous and fickle markets on Wall Street. The so-called experts have very little conviction and they have one foot out the proverbial door. We are near all-time highs, so they will sell their positions first without asking questions.If you own JD stock for a fast trade, I'd suggest setting up your stops below $25.25 per share. But if you're in it for the long term, then I'd ignore these short-term gyrations for as long as the macroeconomic conditions are this good. We are fully employed and we have central banks committed to fuel the fires. They say to not fight the Fed, so I expect stocks to climb this wall of worry with sporadic dips. * 7 Top-Rated Vanguard ETFs to Buy in 2019 It is crucial to note that this is not December. Last year ended in a Christmas crash because sentiment was horrendous. This time the Fed has flipped from a foe to friend and an ally to stocks. They will rescue Wall Street.The long-term viability of a competitor like JD.com has its critics. They compare it to AMZN so they wrongly assume that it's going to fail. Amazon proved that the world wants to transact online. That's why they gutted the brick and mortar retail industry. This trend is still in its infancy and there is no turning back. So there will be room for many competitors of all sizes that will thrive for decades to come.JD.com has a legitimate shot at being one of them and for as long as they deliver growth, investors should give them a pass on profitability.Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room free here. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Dark Horse Stocks Winning the Race in 2019 * 6 Chinese Stocks to Sell That Are Suffering From a Digital Ad Slowdown * 4 Technology Stocks Blasting Higher Compare Brokers The post It's Not Yet Time to Cash In On JD.com Stock appeared first on InvestorPlace.
Back in September, Alibaba (NYSE:BABA) announced a joint venture in Russia called AliExpress Russia JV. It now is a done deal. The question is how it might affect Alibaba stock.Source: Charles Chan Via FlickrSo let's take a look at the details: The company, along with the Russia sovereign wealth fund (RDIF), each agreed to invest $100 million and MegaFon (Russia's second largest mobile operator) will sell its 9.97% equity stake in Mail.RU to Alibaba for a 24.3% in the JV.Then Mail.ru will transfer its Pandao ecommerce business and $182 million for a 15% position. By doing this, the JV will have sufficient cash resources but also access to key technology assets and distribution, with access to about 77 million subscribers.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Dark Horse Stocks Winning the Race in 2019 Here's what the CEO of Alibaba, Daniel Zhang, said about the deal:"This partnership will enable the AliExpress Russia JV to accelerate the development of the digital consumer economy of Russia and CIS countries in ways that no one party could accomplish alone. Together, we are uniquely positioned to offer consumers in Russia and neighbouring countries an innovative shopping experience by combining social platforms with commerce, as well as enabling regional brands and SMEs to sell their products locally and globally. Alibaba's mission is to make it easy to do business anywhere. This JV is an important part of Alibaba's international expansion and step toward our goal of supporting 10 million small businesses reach profitability and serving 2 billion consumers around the world."It's true that Russia can be a risky market. Let's face it, the government has a history of periodic interventions, which have resulted in losses for foreign partners. Just look at the challenges that companies like Exxon Mobil (NYSE:XOM) and BP (NYSE:BP) have had to deal with.But then again, China is a tough market to navigate as well. And for the most part, Alibaba has thrived.Interestingly enough, the U.S.-China tensions may push China toward different alliances, such as with Russia. This would certainly make it more amenable for arrangements like AliExpress Russia JV.Something else to consider: It will get tough for BABA to keep up the growth in its ecommerce segment in the years ahead. While China still has lots of upside, this will likely come from smaller cities, which could be more difficult to monetize. In other words, BABA has little choice but to look at global expansion, even in riskier countries. Bottom Line on Alibaba StockIn the meantime, Alibaba's business is running on all cylinders. For the fiscal year ended March 31, revenues soared by 51% to $56.2 billion and net cash flows came to a hefty $22.5 billion.Although, this should not be much of a surprise as the company has a dominant platform. Note that the retail marketplaces have 654 million annual active consumers and there are 721 Mobile MAUs (Monthly Active Users).But of course, Alibaba stock is more than just about ecommerce. The cloud business, for example, continues to see much traction. During the latest quarter, the revenues for this segment jumped by 76% to $1.15 billion. In fact, BABA is the clear leader in the Chinese market. And as seen with Amazon.com (NASDAQ:AMZN), the cloud business can produce juicy margins.Alibaba stock is also trading at an attractive valuation, with the forward price-to-earnings multiple of about 24X, which is at a steep discount to the growth rate. It is also cheaper on a relative basis to other Chinese ecommerce operators, like JD.com (NYSE:JD), that is trading at 28X and is growing at a slower pace.Tom Taulli is the author of the upcoming 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 * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Dark Horse Stocks Winning the Race in 2019 * 6 Chinese Stocks to Sell That Are Suffering From a Digital Ad Slowdown * 4 Technology Stocks Blasting Higher Compare Brokers The post This New Deal with Russia Makes Alibaba Stock Look Even Better appeared first on InvestorPlace.
Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the […]
At another time, in another situation, the owners of JD.com (NASDAQ:JD) stock might cheer the company's decision to open more brick-and-mortar locations in rural parts of China. Juxtaposed against the current backdrop of tariff wars, however, the strategy may become a negative catalyst for JD stock.Source: Daniel Cukier via FlickrRunning out of room to continue growing online, China's second-biggest online retailer is doubling down on the development of storefronts as part of an effort to meld digital and physical retailing. The move is taking shape at a time when China's consumer market may be close to crumbling, pushed past a point of no return by the trade conflict which seems to be a political standoff neither side wishes to back down from. * 7 Stocks to Buy As They Hit 52-Week Lows Even if the tariff battle comes to an amicable close, its damage may prove to be too much for JD stock to simply shrug off.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Back to Brick and MortarWhereas JD's rival, Alibaba (NYSE:BABA), has built itself from the ground up as an online-selling middleman, JD has based a business on empowering China's brick-and-mortar stores. JD Logistics and its supply chain tech cater to a largely underserved market of small shops peppered across the country.JD- despite all of its internet-tech capabilities -- has always had something of a soft spot for actual shops and shoppers. In 2017, its CEO, Liu Qiangdong, vowed to open 1 million convenience stores all across China by 2022, and in 2018 it opened a cashierless store in Jakarta, ripping a page from the Amazon.com (NASDAQ:AMZN) playbook.It doesn't appear either initiative is going to go as initially planned, but not because JD couldn't forge ahead. Rather, its brick-and-mortar retail strategy appears to have adapted.JD is now aiming to cultivate a network of 15,000 small stores (up from 5,000 as of the end of 2018) as a means of connecting with its customers. These units, which are best described as franchises, will serve as de facto showrooms; sales of home appliances seem to be the focal point of the strategy.Beyond that, JD is looking to develop stores with much bigger footprints, on the order of half a million square feet, in every major city in China. Though appliances will surely be part of that division's mix as well, it would be difficult to fill that much space with just appliances. The sheer scope of the planned stores implies they'll look more like traditional superstores, particularly given that JD is also acquiring a major stake in established appliance retailer Jiangsu Five Star Appliance. Right Idea, Wrong Time?Though China's e-commerce spending is still growing, its expansion has measurably slowed, and should continue to slow as saturation turns into a headwind.To that end, the move to an omnichannel strategy is the right one for JD.com stock, particularly when it touches China's more rural areas and its older consumers. More than 240 million of China's shoppers over the age of 60 live in the more rural western part of the country, and while they're not completely unfamiliar with the web, they're not necessarily internet or e-commerce savvy. Many still prefer to shop in person.No part of China, no matter how remote, however, is immune to the impact of a trade war that's gone on far longer than many expected it would.But the impact of the conflict is debatable. Retail spending in China during the first quarter was up a healthy 8%, defying the odds and the worriers.The problems caused by the conflict have become clear and frequent, though. In April, China's retail sales growth fell to a 16-year low of 7.2%, as the ripple effect of the trade war began reaching all facets of the nation's economy.April's industrial output also slowed rather dramatically. Meanwhile, the conflict has affected JD stock, as JD stock price is down 5% in the last month and 32% over the last 12 months. The Bottom Line on JD StockWhile China's urban areas accounted for 85% of last quarter's e-commerce growth, rural online spending grew 9.2% versus a more modest 8.2% rise in online shopping by China's urban residents.So there's money to be made in the rural areas, if a company can just find a way to connect with those consumers, and assuming the country's economy holds up in the midst of the trade tensions.JD.com has undoubtedly mapped out a plan to make sure it's able to connect with rural consumers, potentially boosting its profits and JD.com stock in the process.JD is taking another step to advance that goal. Specifically, it's planning a cost-effective delivery network. China's Civil Aviation Administration has already given JD permission to test delivery drones in the remote northwest Shaanxi province. JD ultimately hopes to develop 10,000 drone "airports" meant to serve hard-to-reach places.If, however, JD bets big on consumers at a time when China's consumerism hits a wall, JD stock price could take a big hit, since brick-and-mortar retailing appears to be the biggest part of its growth plan.It's a potential pitfall that's just too big for the owners of JD stock to ignore.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy As They Hit 52-Week Lows * 4 Antitrust Tech Stocks to Keep an Eye On * 5 Gold and Silver Stocks Touching Intraday Highs Compare Brokers The post JD's Big Bet on Rural Storefronts Could Hit JD Stock appeared first on InvestorPlace.
How China's Tech Stocks Have Performed since Start of May(Continued from Prior Part)JD.com stock returnsChinese (FXI) online retailer JD.com (JD) has been pummeled over the last 18 months. The stock has lost over 40.0% since the start of 2018.
It's amazing the difference a month's time can make. In early May, headlines shouted that insiders believed a trade deal between the U.S. and China was imminent. Today, leaders from the two nations have ratcheted up their angry rhetoric. This of course places incredible pressure on Chinese flagship company Alibaba (NYSE:BABA) and the underlying BABA stock.Source: Shutterstock Naturally, investment sentiment perfectly illustrates the ebb and flow within the political realm. The first three trading sessions last month started with relatively strong upside movements. But once angry social-media posts proliferated from the White House, the Alibaba stock price tanked. Since May 1, shares have dropped nearly 21% while the 403-stock iShares MSCI China ETF (NASDAQ:MCHI) is down 12.4%; BABA stock is the exchange-traded fund's second-biggest holding.Those looking for a respite in Alibaba stock shouldn't hold their breath. Throughout the first round of the U.S.-China trade war, Beijing adopted a comparatively measured approach. They were content in letting, to paraphrase Confucius, a fool open his mouth and remove all doubts (about his foolishness).InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Bank Stocks to Leave in the Vault But now, the second-biggest economy in the world has apparently lost its patience. Just recently, Beijing launched an attack on the Trump administration, calling out American "intimidation and coercion." Such nasty vitriol does nothing for the longer-term prospects of the BABA stock price.Yet Alibaba seems to have a workaround. Last year, the Chinese tech giant introduced its strategy to court high-level international brands to its home import market. A synergistic component of this strategy is to sell cloud services to international firms seeking a foothold in China.This vision had the potential to take Alibaba stock to the next phase of its growth cycle. But with the trade war showing no signs of abating, investors should dismiss this narrative. Alibaba's Cloud Turned into a Paper TigerAs comparatively new entrants on the elite global stage, a subtle desperation underlines virtually all major Chinese companies. The firms are both eager and anxious to prove to the western investing establishment that they belong.As such, companies like Alibaba, Tencent (OTCMKTS:TCEHY) and JD.com (NASDAQ:JD) have a vested interest in putting their best foot forward. Regarding Alibaba, they're proud about their global market share in the cloud, taking around 5%.But relative to the competition, that's a small tally. Amazon (NASDAQ:AMZN) is the decisive leader at 35% and Microsoft (NASDAQ:MSFT) comes in second at 15% share. With China levering a population size four times that of the U.S., Alibaba is doing less with more.Adding to deeper questions about BABA stock is the company's list of cloud customers. Yes, they have some big-time names like Ford Motor (NYSE:F). But that's only because Ford is desperate to break into the Chinese market. Without China, the car maker is toast. Thus, management figures going with a Chinese cloud platform is the most-effective means to secure Chinese customers.But most companies aren't clinging to life support the way Ford is. Those firms have no need for Alibaba's services because they can get better support from Amazon or Microsoft. Plus, if a major organization doesn't want those two platforms, they have better options, such as Alphabet (NASDAQ:GOOGL) or IBM (NYSE:IBM).Finally, the trade war complicates Alibaba stock because it negatively impacts the underlying company's cloud ambitions. Contrary to common opinion, leading in the cloud involves more than just building a massive data center. Software and infrastructural compatibility between provider and client is critical.Worsening relations between the U.S. and China also cuts business and technological ties. This makes compatibility a possibly insurmountable challenge, hurting the case for BABA stock. BABA Stock has Few Options AvailableLove him or hate him, President Trump tells it like it is. Okay, maybe he tells it like he thinks it is. But when it comes to the issues leading up to this trade war, Trump dropped some truth bombs.An alarming CNBC poll revealed that 20% of corporations have had their intellectual property (IP) stolen by the Chinese. That's a major concern because IP represents the majority of the value of S&P 500 index companies. * 7 Stocks to Buy for Monster Growth So while Americans are going back and forth about Trump's policies, the rest of the world sees things differently. They don't want to suffer the same consequences that U.S. blue chips have. Therefore, I anticipate reluctance in trusting Chinese services, which in turn hurts Alibaba stock.China must get over this key credibility problem. The Trump administration is making it difficult to do so, constantly peppering it with embarrassing exposes. A big reason why the Chinese are reacting angrily is because the insults and accusations feature a ring of truth.This geopolitical headwind places Alibaba in an awkward situation. As I stated previously, the company is China's flagship. But with the flag under duress, I'd be cautious on BABA stock.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 4 FANG Stocks Won't Be Bitten By Regulation Threats * 10 Stocks to Buy That Could Be Takeover Targets * 4 Big Bank Stocks Rebounding Compare Brokers The post The Cloud Cannot Save Alibaba Stock from the US-China Trade War appeared first on InvestorPlace.
Until mid-May, the shares of Chinese ecommerce powerhouse, JD.com (NASDAQ:JD), had been in the bull mode. They went from $21 to $30. But lately, things have gotten wobbly with JD stock.Source: Daniel Cukier via FlickrNote that the return is about -13% from the highs. Yet in comparison to other large Chinese operators, the drop has not been as pronounced. For example, Alibaba (NASDAQ:BABA) is down by 23% and Baidu (NASDAQ:BIDU) is off a grueling 33%.Yes, when it comes to Chinese tech stocks, there is usually a good amount of volatility. After all, there is always the pervasive political risk, which has been heightened lately.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 6 Big Dividend Stocks to Buy as Yields Plunge Might there be an opportunity with the sell-off in JD.com stock? Is it time to think of a purchase? Well, for the most part, I think there could more downside from current levels, and to see why let's take a look at the following: JD Stock: Drama and DistractionJD.com has really been weighed down by drama and distraction. All this is mainly due to the founder and CEO, Richard Liu. Last August, he was arrested in Minnesota for "criminal sexual conduct" against a female student. While the charges were dropped, it was still a concerning episode for investors.Since then, Liu has been the center of more controversy. For example, he called some of his workers "slackers." This was in response to the growing discontent in China about long work hours called "996," which stands for a six-day work week that has a daily schedule from 9 a.m. to 9 p.m.Such things come against the background of JD.com's decelerating growth ramp. During the latest quarter, the revenues increased by 21%, which was the lowest since the company came public. To put things into perspective, the revenues were up by 33% in Q1 of 2018.Even more worrisome is the sluggishness of annual active customers growth, coming to only 3% in Q1. A year ago, it was 28%. This is kind of perplexing, actually, since JD.com has a partnership with Tencent (NASDAQOTH:TCEHY), which operates WeChat, the largest social network in China. Shouldn't this be a source of much more growth in the customer count?I think so. If anything, this does look like a sign of a lack of discipline and execution from management. JD Stock: ValuationThe valuation is not cheap. Consider that the forward price-to-earnings multiple is 27X.This is at a premium to BABA, which is trading at 22X. And yes, the company is growing much quicker and has a more diversified platform such as with its cloud business and entertainment ventures. JD Stock: Trade and the Chinese EconomyThe escalating tensions between China and the U.S. is perhaps the biggest risk factor for JD.com. Keep in mind that the company has recently initiated layoffs of 8% of the workforce. True, there was probably a need for restructuring. But the move does point to challenges with growth in the business. In fact, the company has also been getting more aggressive with promotions and discounts.As for the trade situation, it is far from clear what the endgame will be as both sides have been digging in. With the rise of uncertainty, there could easily mean slower growth in China as businesses pull back on investments. This means there could be increased headline risk for JD Stock.Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. 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 * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Sell Impacted by the Mexican Tariffs * 6 Big Dividend Stocks to Buy as Yields Plunge * The 10 Biggest Announcements From Apple WWDC 2019 Compare Brokers The post JD Stock Almost Looks Attractive at Its Current Levels, but It Isn't appeared first on InvestorPlace.
If there's been one constant for JD.com (NASDAQ:JD) stock since its 2014 IPO, it's been volatility. The chart of the JD stock price looks like a roller coaster and admittedly not a terribly pleasant one at that.Source: Daniel Cukier via FlickrJD.com stock has returned about 41% from its $19 IPO price. But that's only a 7% or so annual return over the five years - and JD.com has gained 6%, total, from its first-day close just shy of $25.To be sure, some traders have done better or worse. The round-trip in the JD.com stock price from below $20 in 2016, to $50 18 months later, and back below $20 late last year created opportunities for longs and shorts alike. External factors, most notably of late, on-again, off-again trade war worries, have driven much of the volatility, particularly over the last eight months.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Stocks to Buy for Monster Growth That volatility is likely to continue, not just for JD but other Chinese plays. But in the case of JD, patience seems likely to pay off. At the same time outside noise seems to be getting louder, JD.com's performance is getting stronger. Once that noise dies down, the stock seems likely to rise. Another Strong Quarter Boosts JD.com StockFirst quarter earnings from JD.com certainly seem to strengthen the long-term case. Both sales and earnings per share crushed analyst estimates. Revenue rose a solid 21% - even if that figure admittedly was the company's lowest growth rate since going public. Operating margins in the core business - now referred to as JD Retail - expanded a solid 60 bps year-over-year.The quarter isn't perfect. As The Motley Fool pointed out, even JD.com CEO Richard Liu admitted on the post-earnings call that profit in the quarter was "a little bit high." Slowing sales growth is a function in part of JD.com's increasing size, but the increase in revenue also was notably lighter than that of larger ecommerce rival Alibaba (NYSE:BABA).Still, the quarter seems like good news. Most notably, it seems to confirm the bullish thesis for JD.com stock that came out of a similarly strong fourth quarter report. As I wrote after that release, JD.com seemed to have clarified and strengthened its story after Q4. Worries about operating margin compression were explained by increased detail about investments in other areas, and the broader strategy seemed an echo of that of Amazon.com (NASDAQ:AMZN), focusing on revenue growth above margins.Given how successful that strategy has been for Amazon, both in terms of its growth and its stock price, the path chosen by JD.com seemed similarly attractive. A second straight blowout quarter, meanwhile, confirms that the strategy is on track. External Factors and JD.comThe report seemingly has done little for JD shares. JD.com actually is down 10% in just the last month and threatens a three-month low as I write this. It trades below levels seen ahead of the release.The problem, again, is external. JD.com spent the second half of 2018 pretty much in freefall owing mostly to fears about the Chinese economy and the impacts of the U.S.-China trade standoff. The possibility of a U.S. hike to 25% tariffs resurrected those concerns.It's not just JD.com that is selling off, either. BABA shares are down over 20% in less than four weeks. Baidu (NASDAQ:BIDU) is at a multi-year low, albeit with some help from disappointing earnings. iQiyi (NASDAQ:IQ), 58.com (NYSE:WUBA), and other Chinese plays all have pulled back as well.Relative to other Chinese stocks, in fact, JD.com stock actually has performed reasonably well. But the recent declines again show that it's impossible to separate JD.com from broader sentiment towards China.With no apparent momentum toward a trade war resolution, and another U.S. presidential election now less than 18 months away, it's likely sentiment toward the Chinese economy is going to stay rather volatile for the foreseeable future. JD Stock on the Other SideLong-term, the case for JD stock still looks attractive. But some investors may choose to either sit out near-term volatility - or look to profit from it. Put premiums for JD.com aren't particularly high at the moment, but selling the June 2020 25 strike still returns nearly 17% - while locking in a purchase price of $21.50 per share.Traders can also look to shorter-term strikes to either gain premium or capture a below-market price for JD if external fears drive another leg down in the stock.That said, investors shouldn't let those external fears overshadow the fact that JD.com, as a company, looks to be in an excellent position. As large as China's ecommerce industry is, and will be, second place likely is good enough.Efforts in brick-and-mortar retail and other investments haven't paid off yet - but some will over time. The combination of a lower share price and margin expansion has made valuation more reasonable: JD now trades at roughly 25x 2020 consensus EPS. That's likely too low given the company's opportunities.That multiple can get lower, however, particularly if broad market fears grow. And it's likely the road for JD stock going forward will be bumpy. I still believe investors willing to ride out the volatility will be handsomely rewarded in the end. But trading in JD over the last few weeks shows it will take some patience - and possibly some nerve.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy for Monster Growth * Ranking the Top 10 Stock Buybacks of Last Year * 5 Stocks Under $10 With Big Upside Potential Compare Brokers The post If You Can Stomach the Drops, JD Stock Roller Coaster Is Worth Riding appeared first on InvestorPlace.
JD.com (NASDAQ:JD) stock benefitted from a great first quarter. For the first three months of the year, JD stock rose by almost 55%. Now, trade-war concerns and slowing revenues have brought down JD in recent weeks.Source: Daniel Cukier via FlickrAs of this writing, the price stands at just over $26 per share, about 20% below its all-time high. Although JD should prosper long-term, the lingering trade war means JD will more than likely continue to fall in the near-term.From a long-term perspective, I like JD stock. Former GE (NYSE:GE) CEO Jack Welch made it a point to invest in either the largest or second-largest company in an industry. If he led GE today, he might have bought the stock. JD is China's second-largest retailer, lagging only Alibaba (NYSE:BABA).InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Utility Stocks to Trust for Retirement A Closer Look at JD StockAlso, despite not having a cloud division like Alibaba or Amazon (NASDAQ:AMZN), JD typically draws the "Amazon of China" distinction. Unlike Alibaba, JD has followed Amazon's lead in building a logistics infrastructure.Even better, as James Brumley argues, its move into Indonesia could bring JD leadership in a key emerging market of around 264 million people. Most analysts tend to focus on China and India. However, JD has set its sights on a high-growth market with a population almost as large as the U.S. With a gross domestic product per capita of nearly $3,900 per person, it closely mirrors China's per capita GDP in the early 2000s. When the business media finally decides to pay attention to the Indonesia story, JD will have already solidified its position there.Consequently, I also think investors should focus less on the price-to-earnings (PE) ratio. The 26.4 multiple may seem high for a retailer. However, as with Amazon, massive infrastructure spending weighs on profits. Conversely, JD looks very cheap when compared with revenues. JD trades at a price-to-sales (PS) ratio of only 0.55. This compares with a multiple of almost 3.8 for Amazon and a 7.5 PS ratio for Alibaba. JD Stock and Short-Term ObstaclesDespite its long-term appeal this company has too many factors weighing it down to buy now.The fact that JD stock is a Chinese equity makes it much harder to trade. Chinese laws forbid U.S. investors from buying their stocks. As a result, traders must buy a Cayman Islands-based holding company claiming to represent JD.com stock.Killing the goose that lays the golden egg will not serve China well. Hence, for the most part, I do not worry about owning stock in the holding company instead of the firm itself. Still, in the face of tenuous U.S.-China relations, investors need to increase the risk premium that comes with this arrangement.Also weighing on the stock is the rape allegation surrounding founder Richard Liu. Though authorities released Mr. Liu from criminal liability, the 21-year-old victim has filed a civil suit against him. JD tends to move significantly based on news surrounding the case.The trade war has lingered longer than most analysts, including myself, have anticipated. Since JD partners with Walmart (NYSE:WMT) to sell in the U.S. and other places, a trade war can have both direct and indirect adverse effects. As my colleague Josh Enomoto correctly states, without the U.S. middle class, there is no Chinese middle class. Consequently, I would avoid JD until the trade war shows apparent signs of ending. Final Thoughts on JD StockCurrent economic conditions make JD stock a long-term winner facing likely near-term struggles. JD's logistics investment in both China and Southeast Asia gives the company a competitive moat that few will likely match. Moreover, its investment in Indonesia will serve the company well once investors begin to recognize it as one of Asia's rising economic powers.However, in the end, China's prosperity depends on America's middle class. As a result, the stock has fallen as the trade war continues to slow the company's revenue growth rate. As long as this dispute continues, I do not see JD gaining much traction.Still, do not assume these conditions will remain in place forever. Eventually, both the U.S. and China will come to an agreement. At that point, I see little that will stop JD stock.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 6 Marijuana Stocks With Critical Levels to Watch * 7 Utility Stocks to Trust for Retirement * 5 Large-Cap Stocks Getting Crushed in the Trade War Compare Brokers The post Buy JD Stock, but Wait Until After the Trade War Ends appeared first on InvestorPlace.
One of the most successful Tiger cubs, Norwegian Andreas Halvorsen founded his own hedge fund in 1999 and named it Viking Global. The fund, which now manages around $28 billion of capital for its clients, provides offices, San Francisco, New York, London, and Hong Kong. Mr. Halvorsen cut his teeth at Morgan Stanley right after […]
U.S. Senator Chris Van Hollen joins Yahoo Finance to discuss the impact of Trump's trade war saying it's "certainly hurting the U.S. economy." He also weighs in on its impact of Chinese stocks and rising tensions with Iran, saying we "need all the facts" on the tanker attacks.