JD.com's (NASDAQ:JD) stock recently popped after the Chinese retailer approved a fresh $2 billion buyback plan, which will last for the next 24 months.

That approval, along with plans for a second stock listing in Hong Kong, suggest that JD sees upside potential in its shares. But will a big buyback counter the coronavirus crisis-induced sell-off and hold the bears at bay?

What does a $2 billion buyback plan mean for JD?

JD ended last quarter with 64.5 billion yuan ($9.3 billion) in cash, cash equivalents, restricted cash, and short-term investments. It plans to fund the entire buyback from its free cash flow, which hit 19.5 billion yuan ($2.8 billion) in 2019.

An autonomous JD delivery vehicle.

Image source: JD.com.

JD currently has a market cap of $65 billion, so a $2 billion buyback would only reduce its share count by about 3%. Investors should also note JD only approved the plan -- which doesn't obligate it to actually buy back any shares.

JD previously approved a $1 billion buyback plan, which lasted for 12 months, in December 2018. It spent $30 million buying back 1.4 million shares at an average price of $21.48 later that month. However, JD didn't disclose any additional buybacks throughout fiscal 2019 before the plan expired.

In fact, JD's total number of outstanding shares rose 3% (1% on a non-GAAP basis) throughout 2019. JD didn't aggressively repurchase shares as its stock rallied nearly 40% over the past 12 months, which suggests the buyback announcement was aimed at calming investors after founder and CEO Richard Liu was hit with a rape allegation in 2018.

In short, investors shouldn't expect JD to spend anything close to $2 billion on buybacks over the next two years. But if JD's stock stumbles along with the broader markets, the company might opportunistically accumulate and cancel out some shares.

With or without buybacks, JD is still a value stock

JD would still be a solid investment without any billion dollar buybacks. Its annual active customers grew 18.6% annually to 362 million last quarter, marking its strongest quarterly growth in three years, and 70% of its new customers came from lower-tier cities. It revenue growth also remained robust over the past year.

YOY growth

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Annual active customers

4.4%

2.9%

2.4%

9.6%

18.6%

Revenue*

22.4%

20.9%

22.9%

28.7%

26.6%

YOY = Year-over-year. *RMB terms. Source: JD quarterly reports.

JD expects its revenue to rise "at least" 10% in the first quarter, even as citywide lockdowns and quarantines disrupted its supply chain and logistics network. Its operating margin also expanded annually as economies of scale kicked in for its massive logistics network -- which also generates extra revenue by serving other companies.

JD's growth defies the bearish claims that it will fall behind Alibaba (NYSE:BABA) and Pinduoduo (NASDAQ:PDD) in China's crowded e-commerce market. Alibaba recently warned that its core commerce revenue would decline in the current quarter, while Pinduoduo remains heavily dependent on margin-crushing subsidies.

JD's stock still trades at less than one times its annual revenue after its rally over the past year. That's an absurd valuation, especially when we consider that China's COVID-19 infection rate is slowing down as businesses come back online.

Plenty of room for growth

During last quarter's conference call, CFO Sidney Huang stated that JD would resume its "robust growth momentum" and "improving margin trend" after the outbreak ends.

JD should take advantage of the market downturn and buy back some shares, but it remains an undervalued growth stock either way. The buyback plan won't hold all the bears at bay, but that safeguard could make it a less attractive target for short sellers.