Even though JD.com (NASDAQ:JD) has lost CN¥6.9b market cap in last 7 days, shareholders are still up 79% over 3 years
It hasn't been the best quarter for JD.com, Inc.(NASDAQ:JD) shareholders, since the share price has fallen 29% in that time. But don't let that distract from the very nice return generated over three years. In the last three years the share price is up, 79%: better than the market.
In light of the stock dropping 8.0% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive three-year return.
Because JD.com made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last 3 years JD.com saw its revenue grow at 25% per year. That's well above most pre-profit companies. While the compound gain of 21% per year over three years is pretty good, you might argue it doesn't fully reflect the strong revenue growth. So now might be the perfect time to put JD.com on your radar. A window of opportunity may reveal itself with time, if the business can trend to profitability.
A Different Perspective
While the broader market lost about 4.6% in the twelve months, JD.com shareholders did even worse, losing 32%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 8%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand JD.com better, we need to consider many other factors.
source: yahoo
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