Shares of JD.com (JD 6.12%) jumped as much as 5.2% early Thursday then settled to trade up 2.8% as of 3:45 p.m. ET after the Chinese e-commerce giant revealed it's planning sweeping raises for its front-line staff next year.
In a post to its official WeChat account this morning, JD.com said it will nearly double the fixed salaries for its procurement, sales, and other front-line staff beginning Jan. 1, 2024. JD.com also said its retail staff will receive 20%+ pay increases.
A vote of confidence from JD.com
The market appears to be taking this development as an encouraging vote of confidence in JD.com's growth trajectory. JD.com has struggled to drive top-line growth in recent quarters -- with revenue last quarter rising a modest 1.7% year over year -- amid fierce competition and macroeconomic uncertainty that has dampened consumer spending in China.
At the same time, however, JD.com shares surged earlier this month after the Chinese government initiated new stimulus measures designed to stimulate the country's economic growth and bolster its struggling property sector. If these significant pay raises are any indication, perhaps JD.com is already seeing some of the early positive impact of those stimulus measures.
What's next for JD.com investors?
JD.com should be slated to release its fourth-quarter and full-year 2023 results in early March. On the former, most analysts are modeling an accelerated 6.2% increase in quarterly revenue, which would mean a slight (0.2%) decline in revenue for all of 2023.
Most analysts will be more focused, however, on any clarity JD.com management can give investors with regard to growth in the coming year. With consensus estimates on Wall Street calling for a return to top-line growth of 6.8% for 2024, any incremental optimism would be well received by shareholders looking for JD.com's growth headwinds to abate.
