JD.com Inc., China’s second-biggest online retailer, plunged after it reported flagging sales growth on its marketplaces and management expressed concern about the country’s economic slowdown.
The American depositary receipts dropped 7 percent in New York to $23.43, the lowest since February 12. Trading volume of 45.3 million shares was more than triple the daily average of the past three months. The ADRs were among the 10-worst performers on the Bloomberg China-US Equity Index, which slid 3.6 percent.
Gross merchandise volume on JD.com’s retail marketplaces rose 55 percent to 129.3 billion yuan ($20.1 billion) in the three months ended March 31, down from the year-ago quarter’s 99 percent increase. The Beijing-based company cited weaker consumer spending, but investors see that as more excuse than explanation, said Henry Guo, a San Francisco-based analyst at Investment Technology Group.
Alibaba Group Holdings Ltd., China’s biggest online retailer, “is doing fine in the same business environment,” said Guo. “The GMV data is disappointing.”
Alibaba last week posted a 39 percent surge in revenue as the company shrugged off a slowing economy with promotions to woo cash-rich consumers. The company’s GMV rose 24 percent to 742 billion yuan in the last quarter, up from 23 percent in the previous quarter.
JD.com’s revenue in the first quarter rose 47 percent to 54 billion yuan, compared with analysts’ estimates of 54.3 billion yuan. The company estimated that sales for the next quarter will be as much as 66.2 billion yuan, compared with analysts’ projection of 65 billion yuan.
“As we have cautioned since last the October, since last August, a sustained weak economic environment could over time hurt consumption,” Chief Financial Officer Xuande Huang said on the earnings call on Monday. The CFO also cited slower cellphone sales.
Investors don’t think the company’s guidance is “good enough,” given that GMV growth in the last quarter already slowed, said Tian X. Hou, founder of research firm T.H. Capital LLC, by phone from Beijing.
While the decelerating GMV growth may weigh on the near-term stock sentiment, the increasing emphasis on profitability could lead to more sustainable growth in the long run, analysts led by John Choi at Daiwa Capital Markets wrote.