Shares of JD.com (JD 6.12%) fell 9.8% this week, according to data provided by S&P Global Market Intelligence, as analysts mulled the implications of worrisome economic data coming out of China for the Chinese e-commerce leader.
On China's GDP growth, potential headwinds for JD
On Wednesday, China's National Bureau of Statistics announced the country's economy grew by 5.2% year over year in the period from October to December, falling slightly short of expectations for 5.3%. The mainland Chinese CSI 300 index plunged to a five-year low on the news, dragging popular Chinese stocks like JD down with it.
Meanwhile, analysts at Wall Street firm Mizuho further fueled JD's decline on Thursday by reduced the firm's per-share price target for the stock from $40 to $35. While Mizuho also reaffirmed its buy rating on JD shares, its analysts worried that consumer spending in China would "remain subdued" despite record-high savings rates, given the country's real estate industry headwinds and rising unemployment.
What's next for JD shareholders?
Indeed, JD.com has struggled to drive revenue growth amid fierce competition and macroeconomic uncertainty in recent quarters. Revenue last quarter climbed a modest 1.7% year over year, though shares rebounded in December as the Chinese government initiated new stimulus measures designed to spur economic growth and its property sector. JD also saw increased investor enthusiasm after the company announced it would implement sweeping raises for front-line staff in 2024.
Assuming the timing of its past releases are any indication, JD should be slated to announced fourth-quarter 2023 results in late February. We can be fairly sure, however, that investors will be most interested in management's guidance for the coming year. With analysts' consensus estimates calling for revenue growth in 2024 to accelerate to 6.3% (from a full-year decline of 1.7% in 2023), JD stock's near-term direction will likely depend on whether it meets, exceeds, or falls short of those targets next month.
