In this episode of MarketFoolery, host Chris Hill and analyst Matt Argersinger talk about recent market news. Shares of Chinese e-commerce giant JD.com (NASDAQ:JD) fell after sexual misconduct allegations were raised against the company's CEO. Whatever comes of the allegations, JD has a lot more risk today than it did last week, and investors should tread carefully.

Meanwhile, Nike (NYSE:NKE) did what Nike often does: Raise a storm of opinions with its ads. The stock dropped a bit, but the company is no worse for long-term wear. Dunkin' Brands Group's (NASDAQ:DNKN) shares are doing just fine, but that doesn't mean the company didn't have a disastrously bad mix-up in Massachusetts this weekend. Tune in to hear more.

A full transcript follows the video.

This video was recorded on Sept. 4, 2018.

Chris Hill: It's Tuesday, September 4th. Welcome to Market Foolery! I'm Chris Hill. Joining me in studio, Massachusetts' favorite son, Matt Argersinger.

Matt Argersinger: Oh, thank you! [laughs] 

Hill: There's probably someone out there who actually is Massachusetts' favorite son, and they're like, "Wait a minute!"

Argersinger: "No, no!"

Hill: Not in terms of this show. We're going to talk about some news out of Massachusetts as we get ready to kick off the NFL season. And yes, we're going to talk about Nike. We've got to start, though, with JD.com. That's why Matty's in the studio, so he can explain what is going on. JD.com, second-largest e-commerce company in China after Alibaba. Shares down 6% this morning and hitting an 18-month low on the news that CEO Richard Liu was arrested on suspicion of criminal sexual conduct. He was released. This took place over the weekend in Minneapolis. I have so many questions, I'm not really sure where to start here. I guess the thing that struck me right off the bat was, wait a minute -- no disrespect to Minneapolis, Minnesota, but what's going on in Minneapolis that the billionaire CEO of the second-largest e-commerce company in China is hanging out there?

Argersinger: Well, he's there because he's doing an executive doctoral program. The University of Minneapolis has a relationship with this really prestigious university in China where he's actually doing most of his studies. So, there's a reason for him. I was kind of befuddled by that, too. What is he doing in Minneapolis? Is he pursuing a degree? But, that explains that.

The news, though, about the accusation... we know very little, but the facts so far suggest to me that this was either a terrible misunderstanding -- and I mean terrible -- or he was potentially targeted by someone, maybe someone or some organization, looking to sully his reputation, frame him as a criminal. I'm not sure. And I'm only saying this -- and I don't know the facts -- because, even if there was very little evidence, I find it hard to believe that the Minneapolis police force would release him without bail and let him go back to China if there really was something to this. It's just strange to me that he was arrested, he was in jail, he was released --

 Hill: He denies any wrongdoing.

Argersinger: Right. And his lawyer -- whose name, by the way, is Earl Gray, which I think is fantastic -- said it's highly unlikely that any charges will ultimately be brought. So, there's that. But then there's also, of course, well, the reputation right now is pretty sullied. In many ways, the damage might already have been done.

Hill: This is a company that you've studied for a while. We've talked about plenty of companies in other industries where the leadership of the company is one of the main reasons for the bull case for that company and for that stock. When you look at JD.com, up until last weekend, how much was Richard Liu a part of the bull case for buying shares of JD.com?

Argersinger: Unfortunately, I would say, to me and I think most analysts here, would say about 75%. He's a founder of this company. He owns a major stake in the business. He essentially has spearheaded the company's growth for two decades. He controls 80% of the voting power. He makes all the big decisions for JD.com. So, when I say the damage is already done, you also have to understand, he's also a bit of a celebrity in China. He's also married to a celebrity. He's a billionaire. You mentioned that JD.com is the second-largest e-commerce company. It's actually the largest retailer, direct-to-consumer retail, by revenue. He's a big figure in China. It's as if he's Jeff Bezos, but if Jeff Bezos was more public than he is in the United States. I think that's how you define Richard Liu in China. I agree, an investment in JD.com to me is an investment in Richard Liu. Not only that, you have major corporations like Walmart, AlphabetTencent, who have invested in JD, had partnered with JD. To what extent does this story, if it goes anywhere, hurt their interest in working with JD.com in the future? A lot of risks have bubbled up now. If you're a proud shareholder of JD.com -- and I am a proud shareholder, or, was -- you feel a bit less proud, you feel a little more worried today. A little more anxious.

Hill: On the flip side -- we've talked before about, it's been an odd year for Chinese stocks. When you look at some of the biggest players, you look at Alibaba, iQiyi, Baidu, stocks that are, as a group, down around 20% or so year to date -- in some cases, more than that. I think the last time you were in the studio, you said something to the effect of, "If these things go any lower, they're going to start looking absurdly cheap." In the case of JD.com, it's at an 18-month low. For anyone who's trying to be opportunistic, it seems like maybe now is the time to take a long look at this. If he is completely exonerated, and you factor in all the partnerships, that his leadership continues, all that sort of thing, then of all of the Chinese stocks that we've talked about, this might be, arguably, the one that is the most undervalued at this point in time.

Argersinger: I agree. I mean, I thought it was cheap at $40 a share. Now it's under $30 today after the news. It's trading for less than 1X its annual revenue. You can actually strip out a lot of parts of the business -- the logistics business, the finance business -- and it's even cheaper, if you're just valuing the core e-commerce business. China stocks across the board are cheap. My only hesitation with JD -- and I would say the same with Alibaba -- you are a little bit betting on the entrepreneur, at this point, the tycoon behind this company. If this story does go anywhere, I don't think it will, but if it does, even as cheap as JD is ... I'd wait for more news. I'd wait for confirmation. 

Hill: You mentioned Jeff Bezos. Earlier today -- we'll see if this holds up, because we're taping this in the middle of the market's trading day -- earlier today, Amazon did hit the $1 trillion mark, in terms of its market cap. So, congratulations! You called it. Now, granted, Apple got there a few weeks before.

Argersinger: A few weeks!

Hill: But I still think that your prediction that they'd become the first to $2 trillion, excellent shot at that.

Argersinger: I'm sticking with that. If you're interested in a double or nothing on that... I'm good. 

Hill: You're right that Bezos is not very public. But as we were chatting about right before we started taping, he has two speeches that he's giving in the Washington D.C. area later this month. One of them is to the Economic Club of D.C. If they hold true to their promise that they announce by the end of the year where their second headquarters is going to be... do you think he drops it? Do you think he says, "Oh, and by the way, I'm happy to announce that our second headquarters will be," and it's either Washington D.C., Montgomery County, Maryland, or Northern Virginia.

Argersinger: It would be the stage to do it. He has a house here. I hope Ron Gross isn't listening to this podcast. No, I think that would be the stage to do it. We just haven't heard much. I think you were looking at the betting figures earlier, it looks like Northern Virginia might actually be the odds-on favorite?

Hill: Right now, yes. For those who engage in that type of...

Argersinger: Pastime.

Hill: Betting activity. Yeah, the offshore, right now, literally, the betting favorite is Northern Virginia. For as much fun as it would be for me personally for Amazon's second headquarters to be one mile from Ron Gross' home -- that would just provide so much entertainment -- it may actually be instead pretty close to where I live. 

Argersinger: So, in other words, your traffic. [laughs] 

Hill: [laughs] Exactly. Nike shares are falling a bit this morning on the news of Nike's latest ad campaign. This is the 30th anniversary of the iconic Just Do It campaign. It features Colin Kaepernick, a photo of Colin Kaepernick with the inscription, "Believe in something, even if it means sacrificing everything. Just Do It." I'm sure Nike knew exactly what they were doing when they picked Colin Kaepernick, when they picked this ad campaign. I'm sure they knew that there was going to be -- as there is, there is some backlash from people who don't like the protests that Kaepernick has undertaken over the last couple of years. Even with the stock dropping about 3%, Nike shares still up 25% year to date.

Argersinger: Yeah. What's the old adage, any news is good news?

Hill: Any publicity is good publicity.

Argersinger: Right, and advertising, it's something just like that. Any attention is good attention. That's exactly what Nike's getting, because we're talking about it and millions of people are. If you check Twitter and Facebook, everyone's engaging with it on social media. It's big news. Nike has a reputation for making bold calls. I think this, for them, is going to be a couple of steps forward, one step back. I think there's going to be a little bit of outrage. Some people are going to say, "I'm never buying Nike again," and then of course they will few months later. It gets them in the news, alienate some fans, but I think Nike's going to get more value out of this than they lose. That's what they do with a lot of these. I remember, Dennis Rodman at one point had a big campaign with Nike when they launched a shoe. He had a bit of a rep, and he still does. They've had celebrities or sports athletes who have ultimately moved the needle for them and caused a lot of stir, but it's usually for the benefit of Nike. 

Hill: I'm not a Nike shareholder, though I certainly wish I have been over the last 10 years. I am an Under Armour shareholder. Looking at it through the lens of Nike's competitors, I'm watching this story play out, and selfishly, I would love to imagine that this presents an amazing opportunity for Under Armour and for Adidas, any of those competitors. I don't know that it ultimately does. As is often the case with sports retail, it comes down to the equipment. It comes down to, how good are the shoes? Yes, marketing is part of it. But Under Armour, back in the heyday of Under Armour, it was because they were making athletic apparel that really resonated with athletes and weekend warrior types and all that sort of thing. In the case of Nike, yeah, you look over the last 30 years of the Just Do It campaign and various campaigns, they're not immune to putting out controversial ad campaigns. It certainly hasn't hurt the long-term performance of the business or the stock.

Argersinger: No. I think Nike's one of the few companies that has... I'm searching for the right word, maybe gravitas, to do something like this. If Under Armour had done this, it'd feel like more of like an all-in bet, like Under Armour is making a pretty controversial statement, they're trying to really galvanize themselves, the brand, in front of a select audience. There could have been a lot more backlash. It could have turned against them. With Nike, I think Nike has that reputation, going back decades, of doing things like this. Like I said, I think the loyal Nike shopper who might be a little mystified by this, in a couple of months, they're back probably buying Nike again, just because they love the product. 

Hill: And we did see a smaller sports apparel version of what we saw play out with Facebook earlier this year, where you had people, because of privacy concerns, upset at Facebook. They said, "That's it. I'm shutting down my Facebook account. I'm only going to be on Instagram now." I saw a few people on Twitter who were like, "I'm never buying Nike again, I'm only buying Converse." It's like, I hate to break it to you, but Nike also owns Converse. 

The NFL season kicks off Thursday night. The Super Bowl defending champs, the Philadelphia Eagles, will host the Atlanta Falcons. Dunkin' Donuts has promotions with a whole bunch of teams in the NFL, mainly the Mid-Atlantic, the Northeast. I noticed it at the Dunkin' Donuts shop right across the street from Fool HQ. Hockey season, you get Washington Capitals-branded cups. They're into the hockey, too.

A bit of a snafu up in Massachusetts. If you're in New York City, they've got the branded New York Giants cups. People in Massachusetts got a little bit of a surprise over the weekend when they ordered an iced coffee from Dunkin' Donuts and it was served in a commemorative Philadelphia Eagles cup. I'll just remind the folks who are not big sports fans that, in the most recent Super Bowl, the New England Patriots lost to the Philadelphia Eagles.

Argersinger: In somewhat heartbreaking fashion.

Hill: In somewhat heartbreaking fashion. That... look. I don't think it does long-term damage to same-store sales in Massachusetts for Dunkin' Donuts, because it's Dunkin' Donuts and it's Massachusetts.

Argersinger: Part of the daily grind.

Hill: It is. But that... I hope someone is, maybe not losing his or her job over that, but I hope someone is getting a stern talking to, a warning of some sorts. It' like, come on! It'd be bad enough if it was, I don't know, the New York Giants.

Argersinger: Right. The Cleveland Browns or the Baltimore Ravens.

Hill: Any of those would be bad!

Argersinger: But the Eagles!

Hill: This is the team that just beat them in the Super Bowl!

Argersinger: I'm just wondering, did the manager not ever look into the packaging, as they're unwrapping all these cups to get out, and see it has the Eagles on it? I just can't believe it. Let me tell you, you think people are talking about this Colin Kaepernick thing? In Massachusetts, they couldn't care less about Nike or Colin Kaepernick. They're just talking about this. I wouldn't be surprised if they were boycotting this particular Dunkin' Donuts wherever this is happening.

Hill: Do you think WEEI, sports talk radio, they're doing four hours on this today?

Argersinger: They led with this. They might even bring Tom Brady on to talk about this.

Hill: Exactly.

Argersinger: Outrageous!

Hill: Sully from South Boston, you're on! Go ahead with your rant against Dunkin' Donuts. Matt Argersinger, thanks so much for being here!

Argersinger: Thanks, Chris!

Hill: As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. That's going to do it for this edition of Market Foolery. The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening! We'll see you tomorrow!

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Chris Hill owns shares of Amazon, UAA, and UA. Matthew Argersinger owns shares of GOOG, Amazon, BIDU, IQ, JD.com, Twitter, and UA and has the following options: long January 2020 $50 calls on JD.com, short January 2020 $50 puts on JD.com, and long January 2019 $15 calls on Twitter. The Motley Fool owns shares of and recommends GOOGL, GOOG, Amazon, AAPL, BIDU, FB, JD.com, Twitter, UAA, and UA. The Motley Fool has the following options: long January 2020 $150 calls on AAPL and short January 2020 $155 calls on AAPL. The Motley Fool recommends Dunkin' Brands Group, IQ, and Nike. The Motley Fool has a disclosure policy.