Shares of JD.com (NASDAQ: JD) were moving higher today after the Chinese e-commerce company delivered better-than-expected results in its fourth-quarter earnings report.
The quarter showed that JD is still struggling in an increasingly competitive environment where the Chinese consumer is weak, but its revenue growth accelerated modestly from the third quarter, and some of its recent strategic changes seem to be yielding results.
As of 10:53 a.m. ET, the stock was up 18.6% on the news.
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JD.com starts to make changes
Revenue in the quarter rose 3.6% to $43.1 billion, which topped analyst estimates at $42.2 billion.
Top-line growth was driven by electronics and appliances, which was up 6.1% to $21.2 billion. Sales of general merchandise was near flat at $13.5 billion.
In the retail segment, operating margin slipped from 3% to 2.6%, but adjusted earnings per share still improved from $0.68 to $0.75, which also beat analyst estimates at $0.63.
CEO Sandy Xu said: "JD's proactive actions have begun to produce results as our decisive focus on user experience, price competitiveness and platform ecosystem drives deeper and more frequent user engagement and healthier user growth momentum. With the two priorities of user experience improvement and market share expansion, we look forward to creating more value for our users, business partners and shareholders in 2024."
JD.com also announced a $3 billion share repurchase program, aimed at taking advantage of the low stock price.
What's next for JD.com
JD.com doesn't give guidance, but the stock seemed to be trading near rock bottom before this morning's earnings report. It's been challenged by intensifying competition from PDD Holdings' Pinduoduo, and it's adapting by selling lower-priced goods and offering more discounts. There's still potential for a recovery, but investors would certainly like to see revenue growth improve to much better than 3.6%.
If revenue growth accelerates, the stock should improve, but that won't be easy in the current Chinese e-commerce environment.
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Jeremy Bowman has positions in JD.com. The Motley Fool has positions in and recommends JD.com. The Motley Fool has a disclosure policy.
