I’ve been bullish on JD.com (NASDAQ:JD) for some time — and it’s a call that looks awful at the moment. The shares have fallen more than 50% from late January highs, and JD stock now trades at its lowest level in almost two years.

To be fair, the volatility isn’t entirely unsurprising. Emerging market stocks generally are higher-risk. So are growth stocks. JD.com stock is both — a Chinese e-commerce play that still trades at 58x 2018 EPS estimates.

And there have been some external — and unforeseen — pressures. Chinese stocks have entered a bear market. Chinese leadership appears to be losing the trade war with Washington. JD stock has been the worst-performing Chinese large-cap, but it’s hardly the only one under attack. Weibo (NASDAQ:WB), NetEase (NASDAQ:NTES), and iQIYI (NASDAQ:IQ) all have fallen 40%+ from their own 52-week highs.

Add to that an ongoing sexual assault investigation surrounding JD.com’s CEO — along with steadily shrinking earnings estimates — and the weakness in JD stock is little surprise. And though I’ve been too optimistic so far, I still believe JD will rally… at some point.

Is JD.com Stock Investable?

Before even considering an investment in JD, let’s determine if Chinese stocks, broadly, are worth investing in. For the most part, the attractiveness of the Chinese market lies in the eye of the beholder.

From one perspective, China is a massive opportunity — a metaphorical gold mine. Tens of millions of citizens join the middle class every year. Consumption continues to rise, as does economic growth. With a population roughly quadruple that of the U.S., there isn’t a bigger market in the world, save perhaps for India. (China’s GDP is far higher, however.) Even if the booming economy slows at some point, from a long-term standpoint Chinese stocks look remarkably attractive.

From the other perspective, Chinese stocks are fraught with danger. Many stocks, including Alibaba (NYSE:BABA) and JD, use a complicated variable interest entity structure that limits shareholder recourse relative to U.S. governance. There are real fears that Chinese macro numbers are fudged. Bears on China have been calling for an end to a supposed real estate bubble for years now. And the country remains under the control of a single-party, Communist government.

Both viewpoints have some validity. I’d argue that Chinese stocks should trade at some kind of discount to American counterparts. But the increasing amount of investment by U.S. firms in Chinese companies suggests more legitimacy than skeptics seem to believe. And there is a growth opportunity here. Right now, the market seems to be focused almost solely on the worries and not on the potential. That seems likely to reverse at some point though perhaps not soon.

Is JD Stock the Best Play?

If an investor thinks the Chinese sell-off is overdone, the question is what the best play might be. As I wrote earlier this month, NTES has an attractive, if somewhat messy, story. High-risk investors can look to IQ as well.

But there’s a nice case here for JD stock for two reasons. First, it’s been hit the hardest in the sell-off. If that sell-off reverses, the biggest loser should become the biggest gainer, at least in theory.

Second, I’m not sure the long-term case here really has changed that much in the past eight months. JD still has a nice path to challenge Alibaba’s dominance in e-commerce and a valuation now less than a tenth of its larger rival. Alphabet (NASDAQ:GOOGL) and Walmart (NYSE:WMT) both have invested in the company, giving credibility to its financials and strategy. JD continues to expand its offline presence, and while those investments are hitting near-term earnings, they also should provide long-term returns. At the very least, JD’s seemingly high earnings multiple is being inflated by reported earnings that are well below the company’s existing earnings power.

There are risks here, to be sure. The investigation surrounding CEO Richard Liu involves serious allegations. Challenging Alibaba will be difficult. Supply chain investments may not pay off. And China’s economy could eventually hit the troubles bears have been predicting for years.

But those risks are balanced by substantial potential rewards. Even being the #2 e-commerce operator in China is an opportunity likely worth more than the current ~$36 billion market cap. Street targets — even with some being pulled down of late — suggest 60%+ upside. This still is basically the same stock it was at $50. The most significant difference is that it is priced at $25.

Caution is Advised

None of that necessarily means that JD stock is necessarily done falling. It is a classic ‘falling knife’ at the moment and still not particularly cheap on an earnings basis. News on the trade front isn’t done, and Chinese stocks on the whole may not have bottomed.

Even for investors who don’t see long-term potential, there’s a case for cautiously entering the stock, whether through partial positions or the options market. Selling put options can lock in either premiums or more attractive entry points. The March 23 put, at about $1.89, offers about 9% return or an entry point of $21. Going out further can drive higher premiums and/or even lower effective prices.

However an investor plays JD.com stock, though, I do see it as undervalued here. Admittedly, I’ve been saying that for a while — and the market disagrees. Time will tell who’s right; but at the moment, JD looks to be worth the risk.

As of this writing, Vince Martin has no positions in any securities mentioned.