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A disappointing earnings report for Alibaba was bad news for JD.
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Shares of JD.com (JD 0.01%), the Chinese e-commerce giant, were falling again today. This time, it was in response to a disappointing earnings report from Alibaba (BABA 0.02%), its close competitor and peer.
As of 1:19 p.m. ET, JD stock was down 4.5%, while Alibaba stock had fallen 6.4%.
Image source: Getty Images.
Investors were hoping that Alibaba's December quarter would give investors a reprieve from a brutal sell-off in Chinese tech stocks, but that was not the case. Instead, Alibaba disappointed the market again, showing that the Chinese e-commerce sector remains weak.
Revenue in the quarter grew just 5% to $36.7 billion, which was in line with estimates. At Alibaba's core commerce group, Taobao and Tmall, which competes directly with JD, revenue rose just 2% to $18.2 billion, which seems to bode poorly for JD's own fourth-quarter earnings report, which is not expected until March. Alibaba said it had a successful 11.11 Shopping Festival and that order volume grew by double digits in the second half of the quarter, which it attributed to its price-competitive strategy.
On the bottom line, Alibaba reported adjusted earnings per share of $2.67, which was down 2% and short of the consensus at $2.69.
Revenue growth at both Alibaba and JD has slowed sharply in recent quarters because of challenges with the Chinese economy and intensifying price competition in the e-commerce sector. Alibaba's report indicates that the price war with peers like Pinduoduo hasn't improved, and that's likely to weigh on JD's results as well, which managed just 1.7% revenue growth in its third quarter.
We'll learn more when JD releases its third-quarter earnings report, which is expected in March. Analysts see revenue falling 1.5% to $42.1 billion, and earnings per share slipping from $0.70 to $0.63. If there's any good news for JD investors heading into the report, it may be that low expectations are already baked in.