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Why JD.com Stock Jumped 23.3% in August

By Keith Noonan – Sep 2, 2020 at 9:06AM

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Stellar business performance has pushed the company's stock up more than 130% this year.

What happened

Shares of JD.com (JD 6.69%) rose 23.3% in August, according to data from S&P Global Market Intelligence. The Chinese e-commerce stock reached a new all-time high after the company published better-than-expected second-quarter results.

^SPX Chart

^SPX data by YCharts

JD released its Q2 results before the market opened on Aug. 17, delivering sales and earnings performance that topped the market's targets. The company posted adjusted earnings per share of $0.50 on revenue of $28.5 billion, while the average analyst estimate (as polled by FactSet) called for adjusted earnings of $0.39 and sales of $27.46 billion.

A person holding a miniature shopping cart on top of a mobile phone.

Image source: Getty Images.

So what

JD's second-quarter revenue was up 34% year over year on a local currency basis, and adjusted earnings per share climbed 52.6%. The e-commerce company benefited from heightened demand stemming from conditions created by the coronavirus pandemic in the quarter. Product sales on its online retail platform climbed 45% year over year in the period, and revenue for the services segment rose 36%.

Now what

JD stock has continued to climb early in September. The company's share price climbed roughly 5% in the month's first day of trading.

JD Chart

JD data by YCharts

As a result of regulations related to the company's recent listing on the Hong Kong Stock Exchange, management will no longer provide guidance on revenue growth or net income. Investors shouldn't fret this shift too much, as the business's outlook remains very promising. 

The e-commerce company's valuation has soared over the last year, but it should still have room to run over the long term. JD has a top position in China's large and fast-growing e-commerce market, and it has opportunities to continue expanding its industry-leading delivery and infrastructure services and tapping into shifting consumer behavior spurring momentum for its online retail platform.  

JD.com has a market capitalization of roughly $128 billion and trades at around 56 times this year's expected sales.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends JD.com. The Motley Fool has a disclosure policy.

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