Last April, former CEO Richard Liu stepped down from JD.com (NASDAQ:JD) after founding the company in 1998. Since then, he has sold almost $1 billion worth of JD stock and its subsidiary, JD Health. JD Health trades on the Hong Kong Stock Exchange and is not tradable in the U.S.
Liu had been slowly drifting away from his company after facing sexual assault allegations in 2018. A University of Minnesota student filed civil charges in 2019 and accused Liu and JD of “false imprisonment, civil assault and battery, and sexual assault or battery.” A jury trial for the case has been set for Sept. 26. Liu and JD have denied all of the claims.
Still, Liu has retained the position of chairman. With that in mind, let’s get into the details of the sales.
Founder Richard Liu Sells Nearly $1 Billion of JD Stock
From late May to early April, Liu sold 8.8 million shares of JD Health that were worth about $57.1 million. Since late May, he has sold 15.1 million shares of JD worth about $907 million. A filing submitted to the U.S. Securities and Exchange Commission (SEC) on June 19 revealed these sales.
So, what does this suggest? Insiders may sell for a variety of reasons, whether it be for tax obligations, personal reasons or a loss of faith in the company. These insiders are not required to submit their reasoning, so it cannot be entirely confirmed as to why Liu sold his shares. However, concerns of a Chinese economic slowdown may have factored into his decision.
JD Posts Record Sales and Slowing Growth
On June 18, JD hosted a shopping festival that saw transaction volumes of $56.61 billion, up 10.3% year-over-year. While the volume is the highest on record, the volume growth was the slowest on record. JD merchants stated that production was affected by coronavirus lockdowns and that consumer demand was “generally low.” Meanwhile, high-end products received more demand than mass-market products.
In a report, credit rating agency Fitch stated, “Online retail growth is likely to be slower this year than in 2020 and 2021, and its gain in penetration rate may be weaker than the average of 2.6 [percentage points] during 2015-2021.”
Fitch attributes the slow growth to weakening consumer sentiment due to concerns of an economic slowdown. The firm estimates that online sales will grow its total market share of retail sales to 29% this year compared to 27.4% in 2021. In 2020, online sales accounted for 27.7% of all retail goods sales.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
