What’s Going On Here?JD.com might only be China’s second-biggest ecommerce retailer, but it’s still a very good boy: the company reported better-than-expected second-quarter results on Monday. What Does This Mean?JD.com’s revenue last quarter was 34% higher than the same time last year, and its profit shot way beyond last year’s too, comfortably beating investors’ expectations. The company had an almost 30% increase in active customer accounts – now totaling almost 420 million – to thank for its rising earnings, as well as a surge in cellphone-using customers who tend to buy things more often.
China’s economy was one of the first to nosedive as the coronavirus pandemic wreaked havoc across the globe, but it was also one of the first to start recovering. And while consumer spending has lagged behind government-supported industrial spending, JD.com benefited from the money that was being spent as shoppers increasingly wandered the aisles of the world wide web. Why Should I Care?For markets: Retail wags the dog.
JD.com’s stock – which investors can, for now, buy in the US and Hong Kong – initially rose 3% after its announcement. Investors probably appreciated its similarity to American ecommerce juggernauts Amazon and Shopify, whose sales have been boosted by the shift in consumer behavior toward online shopping even as stores have reopened. But that might be where the similarities end: Chinese retail sales data fell short of expectations again last week, while in the US, spending’s back to pre-pandemic levels.
The bigger picture: Loud bark, worse bite.
Hot on the heels of his bans on TikTok and WeChat, the US president said over the weekend that he’s now considering banning Alibaba – China’s biggest ecommerce retailer and the country’s answer to Amazon. That might spook its investors, but they’ve got Thursday’s earnings update to focus on first: the company’s expected to grow sales by 30% and profit by almost 70%. | 