Please ensure Javascript is enabled for purposes of website accessibility

Why JD.com Stock Fell Wednesday

By Daniel Sparks - Sep 5, 2018 at 4:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Allegations against JD.com's CEO, which the executive denies, continue to weigh on the stock.

What happened

Shares of Chinese specialty retailer and e-commerce company JD.com (JD 1.82%) were hit hard on Wednesday, falling as much as 11.6%. The stock closed the day down about 10.6%.

The stock's decline comes as more details about allegations against JD.com CEO Liu Qiangdong surfaced on Wednesday. Though Liu continues to deny the allegations -- he was arrested on suspicion of rape and released soon after and no charges have been filed -- investors are concerned nevertheless.

A chalkboard sketch of an arrow heading down.

Image source: Getty Images.

So what

Liu was arrested in Minnesota last Friday and released on Saturday. Initially, the arrest was reported to have been based on allegations of "sexual misconduct." But now The Wall Street Journal says the Minneapolis police told the newspaper the arrest was based on suspicion of rape. Further, the police's investigation continues, according to the Journal [subscription required].

But Liu and his attorney are fervently denying allegations.

"There is no believable or credible evidence that he has done anything wrong and he denies any wrongdoing," Liu's attorney, Earl Gray, told the Journal. No charges have been filed.

An article published Wednesday by The Wall Street Journal included more details about the allegations.   

Now what

Whether or not the allegations prove to be true, the negative press could have a material impact on business.

The stock had already been getting hammered recently, despite strong underlying business performance. Some investors fear how a potential trade war with China could impact JD.

Shares are down about 37% year-to-date.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

JD.com, Inc. Stock Quote
JD.com, Inc.
JD
$53.68 (1.82%) $0.96

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
344%
 
S&P 500 Returns
120%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.