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Why Shares of Jumped Today

By Timothy Green – Updated Nov 15, 2016 at 11:52AM

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The Chinese online retailer beat analyst estimates, growing revenue at a faster rate than expected.

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What happened

Shares of Chinese e-commerce company (JD 2.28%) jumped on Tuesday following a positive third-quarter report. beat analyst estimates for both revenue and adjusted earnings, which drove the stock about 12.5% higher by 11 a.m. EST.

So what reported third-quarter revenue of RMB60.7 billion, or $9.1 billion, up 38% year over year and well above analyst expectations of $8.86 billion. Gross merchandise value rose 43% year over year to $23.8 billion, while the number of annual active customer accounts jumped 57% to 198.7 million. fulfilled 401.2 million orders during the quarter, excluding virtual items, up 55% from the prior-year period.

"We are delighted to announce another strong quarter of results, with solid growth in revenue and new users, as Chinese consumers increasingly prefer to shop online for high-quality products," said CEO Richard Liu. "Long-term investment in our business model is clearly winning over the market and changing the dynamics of e-commerce in China. Looking ahead, we will continue to pursue growth while stepping up our investment in cutting-edge technologies to further enhance user experience."

Non-GAAP earnings per share came in at $0.03, compared to analyst expectations of a loss of $0.06. On a GAAP basis, posted a loss of $0.10 per share. GAAP operating expenses rose by 36.5% year over year, a bit slower than revenue growth.

Now what expects to produce revenue between RMB75.0 billion and RMB77.5 billion during the fourth quarter, representing year-over-year growth between 37% and 42%. also announced along with its report that it was exploring a possible reorganization of JD Finance, the company's internet finance business.

Rapid growth continued during the third quarter for, and profitability remained minimal. Operating margins are improving, and CFO Sidney Huang expects that to continue. "We expect further margin expansion in the years ahead as we focus on technology-driven growth initiatives and strategic investments that lay the groundwork for our long-term industry leadership."

Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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