To The Moon

$JD.com(JD)$ is scheduled to report the quarterly results for period ending 30 Sep 2024 on 14 November 2024 before market open.

JD is expected to show show an increase of 4.9% in revenue to $259.805 billion from $247.7 billion a year ago, the earnings per share is estimated to be at CNY7.42 or $1.06.

Robust Sales Growth From Numbers Issued During Online Shopping Gala, But At What Cost?

JD issued a raft of numbers showing robust sales growth during the country’s biggest annual online shopping gala, belying concerns about the malaise dogging the world’s No. 2 economy.

JD reported customers increased by more than 20%.

But we need to look at what is the cost to generate these robust sales growth, I think we can look at how their cost of revenues, fulfillment expenses and marketing expenses stacked up.

As industry report suggest that $Alibaba(BABA)$ Taobao-Tmall gained market share from JD.com’s rival platform during the shopping festival, so question we need to ask if JD spend more expenses on marketing than second quarter.

One more thing we need to look out is the increase in fulfillment expenses, as JD has implement a new logistics system which should help to ease their fulfillment, so are we going to see a drop in this fulfillment expenses?

Considering that some segments, like travel, are showing signs of recovery, overall spending remains moderated, reflecting a long-term shift toward more mindful consumption. Chinese consumers are expected to stay cautious this year amid the uncertainty of a flagging property market and potential global economic ructions.

So this mean that spending on promotion began much earlier, and we should see an increase in promotion spending, but how much revenue is generated for each dollar spend on marketing.

JD.com (JD) Price Target

Based on 15 Wall Street analysts offering 12 month price targets for JD in the last 3 months. The average price target is $48.11 with a high forecast of $59.00 and a low forecast of $28.00. The average price target represents a 33.27% change from the last price of $36.10.

We might be seeing some positive price movement if the investor sentiment for consumers in China spending should come back, as the economic stimulus might help consumer to generate some extra money for shopping.

Overall, I think that JD.com should stay trading range-bound as there is the expenses that i am concerned.

JD.com (JD) Technical Analysis - MACD and Multi-timeframe (MTF)

Though JD start to trade below the short-term MA recently but if we look at the MACD, it is already showing signs of bearish downside.

And MTF is sharing the sentiment of a range-bound trade with neutral signal, as we need to watch how JD GMV showed up as compared to its expenses.

I would be watching this stock today (13 Nov) to see if can catch a swing trade opportunity.

Summary

If we looked at how JD expenses have stacked up during the Q2 earnings, looks like revenue would need an increase on its fulfillment expenses, so question is whether JD logistic system is working for them.

And with the consumer cautious on their spending, what is the revenue generated for each marketing dollar spend? Considering that some of their customers have gone over to BABA Tmall.

Appreciate if you could share your thoughts in the comment section whether you think JD.com could be able to post an earning surprise.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.