JD.com Share Price Forecast December 2021 – Time to Buy JD?
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Shares of Chinese e-commerce company JD.com (NASDAQ: JD) are in the green today after closing on $78.09 as of December 7th (19:59 EST). The main reason behind the gain can be attributed to the Chinese e-commerce stock receiving a bullish analyst note as well as the rally of tech stocks on early reports that the omicron variant may not be as severe as feared.
JD.com – Technical Analysis
According to the financial statement of JD.com, the market cap of the company is at $120.728 billion with total assets worth $74.75 billion. Revenue for 2020 was at $108.05 billion with a profit margin of 6.62% compared to revenue of $83.49 billion in 2019.
Moving averages for JD.com such as Exponential Moving Average (10) (82.01), Simple Moving Average (10) (84.04), Exponential Moving Average (20) (83.00), Simple Moving Average (20) (84.32) and Exponential Moving Average (30) (82.67) are all indicating a sell action. On the other hand, oscillators such as Williams Percent Range (14) (−76.84), Bull Bear Power (−9.46) and Ultimate Oscillator (7, 14, 28) (41.55) are neutral.
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Recent Developments
JD.com China’s largest direct retailer invested about $50 million in a U.S. e-commerce start-up called Wish which eventually went public last year. The company served over half a billion annual active customer accounts last quarter most of whom are located in China. The company generates most of its revenue from its first-party marketplace — which has much stricter quality control standards.
Apart from fulfilling its orders by leveraging a massive logistics network in excess of over 1200, JD.com is also working on replacing its delivery workers with autonomous vehicles and drones in certain cities. Apart from this, it also has a smaller network of brick-and-mortar grocery stores. JD.com is also planning to expand its digital ecosystem with fintech, telehealth and cloud services.
It achieved higher Annual active customers which hit 552.2 million while service revenue surged 43% to $5.1 billion. The company is developing a physical retail presence in China to capitalize on the trend of online-only retailers. Many analysts believe JD is a stock worth holding as it is able to grow earnings at a compound rate of 27% annually, and the shares are trading at seven times next year’s earnings. The company is facing less pressure from the Chinese government compared to many of its peers as its primarily direct-selling model seems safer from regulatory oversight.
Should You Buy JD Shares?
Investors should look at metrics to determine whether JD.com is worth it. For instance, revenue for the company increased by 29% to 745.8 billion yuan ($114.3 billion) in 2020, and it ended the year with 471.9 million annual active accounts, up 30% from 2019. JD.com’s adjusted net income grew 57% to 16.8 billion yuan ($2.6 billion).
JD.com’s revenue also increased by 32% year over year to 457 billion yuan ($70.8 billion) in the first half of 2021. While annual active accounts rose 27%, adjusted net income dipped 3% to 8.59 billion yuan ($1.33 billion) due to increased spending during the pandemic.
Most of its revenue growth came from China’s smaller cities. The company also benefitted from the new antitrust restrictions that prevent its larger e-commerce rival from locking in merchants with exclusive partnerships as well as facing lower regulatory headwinds.
Compared to most of its peers in China which have a heavy dependence on cheap Chinese products, JD.com is in a much better position. However, it will likely keep on burning cash as it tackles logistics and quality control challenges. Considering this, JD.com is a growth stock for any investor right now.
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