What: Shares of JD.com (NASDAQ:JD) slumped on Monday following a turbulent day for the Chinese stock exchanges. At 3 p.m. EST Monday, the stock was down about 10%.
So what: Due in part to weak manufacturing data, Chinese stocks slumped by 7% Monday before authorities halted trading for the rest of the day. This, in turn, drove a steep drop in U.S. stocks, with U.S.-listed Chinese companies heavily underperforming the indices. JD.com was one of the hardest hit, but stocks including Sohu (NASDAQ:SOHU) and VipShop (NYSE:VIPS) declined as well. Sohu was down about 5% at 3 p.m. EST, and VipShop had slumped 8%.
This isn't the first time this year that a volatile Chinese stock market has pushed shares of JD.com lower. In June, Chinese stock markets began to crash, with the Shanghai Composite Index falling by more than 40% in a few short months. Shares of JD.com crashed along with the Chinese stock market, although the stock had partially recovered before Monday's decline.
Now what: For long-term investors, what matters most is the long-term prospects of the company. For JD.com, that depends on the strength of the Chinese economy, and given the recent stock market turbulence in China, there's certainly a tremendous amount of uncertainty. One thing is for certain: Investors without the stomach for violent stock price swings should stay far away from JD.com.
Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Sohu.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.