JD.com (NASDAQ:JD) American depository receipts (ADRs) fell to lows not seen since 2019 as analysts downgraded the Chinese online retailer.
Additionally, rumors are swirling that chairman Richard Liu has been arrested. Those reports are unconfirmed, but it speaks to the uncertainty surrounding China’s tech sector.
At the time of writing, JD.com is expected to open on Oct. 13 near $26.50 per share. Its market cap is still over $40 billion on expected sales of $14.6 billion and net income of nearly $3 billion. That’s twice as big as the company was the last time it traded this low.
The JD Stock Story
Before the coronavirus pandemic, JD.com was challenging Alibaba (NASDAQ:BABA) for e-commerce dominance. It was delivering products to remote villages using drones and bidding to become a power in the cloud. For a brief time I even owned some JD stock. I sold my position in August 2021.
Since the late 2020 tech crackdown by President Xi Jinping, the company has kept growing, but the stock has done poorly. The share price peaked in February 2021 at over $104. It last rallied early in 2023, reaching about $60 before falling. Growth has slowed and profits have been sporadic.
Liu resigned as CEO in April 2022. He sold a big part of his JD.com stake a few months later but is still considered an important figure.
Bearish analysts are more concerned with China’s economy than with the state of JD.com’s operations. However, the lowered price targets remain well above where the stock is trading.
What Happens Next?
JD.com stock will remain undervalued so long as concerns about China’s recovery and stability continue. A falling tide grounds all boats.
As of this writing, Dana Blankenhorn 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.
