JD.com (NYSE:JD) has earnings ahead on Thursday as the stock looks to find buyers again.
JD – Daily Chart
The price of JD is testing levels around the $40 mark after the stimulus-led surge to $48 has given way.
JD.com Inc. will provide more insight into the growth momentum of the Chinese economy, after investors were disappointed by the size of stimulus measures from a high-profile policymakers’ meeting last week.
The outlook for the retail giant will be in the spotlight as Beijing’s plan only included a 10 trillion yuan ($1.4 trillion) package to tackle hidden debt issues faced by local governments but stopped short of providing new stimulus to bolster consumption. Investors are now expecting more direct measures to stimulate the economy after Donald Trump takes office in January.
JD.com, which is operating in a soft retail landscape, may introduce larger discounts to stimulate consumption during Singles’ Day, the country’s largest annual shopping day. China’s trade-in program to boost appliance demand and consumer goods may also help sales during the November 11 event.
The consensus estimate for earnings per share is $1.04 (+13.0% Y/Y) and for revenue, analysts expect to see $36 billion (+6.1% Y/Y).
Attention will turn to Trump’s plans after he had suggested a tougher stance on Beijing with tariffs and that added to a recent post-stimulus sell-off. The incoming US President is expected to go through with his campaign promise to hike tariffs as high as 60% to 100% on goods from China, and 10% to 20% on all other imports.
JD has almost no US business, with none of it being direct exports, so the exposure is limited to providing logistics to Chinese companies trying to enter the US market. That could boost JD stock if the earnings come in better than expected.
Overall, JD can be a good Chinese long position for Trump’s second term. The company’s stock will likely be affected by tariff talk and can offer a discount to savvy investors.
For the third quarter earnings ahead, the company’s shares will be looking for buyers to emerge around the $40 level.