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Why Stock Rose 11.5% in February

By Steve Symington – Updated Apr 11, 2019 at 3:53PM

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The Chinese e-commerce leader delivered an unexpected quarterly profit last month. Here's what investors need to know.

What happened

Shares of (JD 2.28%) climbed 11.5% in February, according to data from S&P Global Market Intelligence, after the Chinese e-commerce company announced strong fourth-quarter results.

JD stock popped nearly 7% on Feb. 28, 2019 alone after the company confirmed its quarterly revenue had climbed 22% year over year, to $19.6 billion, translating to adjusted net income of $109.1 million, or $0.07 per American depositary share. Analysts, on average, were expecting an adjusted net loss of $0.05 per share on revenue closer to $19.4 billion.

Digital display showing various Asian stock market index prices.


So what

It certainly helped that JD's annual active customer accounts grew 20% year over year in the fourth quarter, bringing its full-year 2018 number of active customers to 305.3 million. But JD chairman and CEO Richard Liu also noted the company "continued to outperform the industry across our key product categories," crediting their surprise profitability to investments in the business that "enhanced the customer experience and enabled greater operating efficiency."

"In particular, our core JD Mall business has continued to grow with improving margin," added CFO Sidney Huang. "We focused on developing industry leading technology innovation and infrastructure to drive greater efficiency and economies of scale in the future."

Check out the latest earnings call transcript for

Now what

Looking ahead to the first quarter of 2019, JD told investors to expect revenue to increase between 18% and 22% year over year, which was roughly in line with analysts' consensus estimates. 

Shares entered February nearly 50% below their 52-week high. When that's combined with solid guidance and's relative outperformance in the fourth quarter of 2018, it was no surprise to see stock rebounding in response last month.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends The Motley Fool has a disclosure policy.

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