JD.com (JD) jumped in premarket trading after the multichannel retailer posted a big drop in profit for the third quarter, but the market brushed it off. The company topped expectations on both earnings and revenue, and hinted that one of its heaviest spending areas may finally be easing.
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The company reported adjusted profit of 5.8 billion yuan ($815 million), less than half the 13.17 billion yuan it earned a year ago. Revenue, however, climbed 15% to 299.1 billion yuan, beating forecasts. Analysts were looking for 4.23 billion yuan in profit on 294.81 billion yuan in revenue.
JD’s American depositary receipts were up about 4% in premarket trading. The stock is still down roughly 10% for the year heading into Thursday, but the earnings beat helped steady sentiment after months of weakness.
JD Cuts Back on Food Delivery Spending
A key reason for Thursday’s relief rally was JD’s signal that it may not need to keep spending so heavily on food delivery. The category has turned into one of the most aggressive and costly fronts in China’s e-commerce competition.
The company entered the segment in February with deep subsidies to pull in users, going head-to-head with Alibaba (BABA) and Meituan (MPNGF). These tactics have squeezed margins across the industry and even prompted regulators to urge “rational” competition.
Now the pressure may be easing. CEO Sandy Xu said JD Food Delivery continued to scale and improve its unit economics, allowing the company to pull back on investment during the quarter. Investors took that as a sign that losses tied to subsidies may be peaking.
Alibaba’s ADRs also traded higher in early action, suggesting a potential breather for the entire sector.
E-Commerce Still Faces a Sluggish Consumer
Even with Thursday’s bounce, JD and its peers remain tied to a sluggish Chinese consumer. Spending across the economy has been soft all year, and that slowdown is showing up in the country’s biggest shopping season.
Sales across major platforms during Singles’ Day rose 14% to 1.70 trillion yuan. This is growth, but it’s a sharp step down from last year’s 27% increase. JD said gross merchandise value hit a record and the number of users placing orders jumped 40%, though it didn’t share specific GMV figures.
The broader takeaway is that competition is still intense, consumers are still selective, and investors want signs that e-commerce players can grow without sacrificing profitability. JD’s update offered at least a glimpse of that balance, and for now, that’s enough to keep the stock moving higher.
Is JD.com a Good Stock to Buy?
Analyst sentiment on JD has held steady in recent months. Eleven firms have weighed in over the past quarter, and the group sits at a Moderate Buy. Nine analysts call the stock a Buy, one is on the sidelines, and one recommends a Sell.
The average 12-month JD price target comes in at $40.05, pointing to roughly 28% upside from recent levels.
