JD.com Inc.’s shares fell by more than 11% on Tuesday, reaching their lowest point since 2018, as analysts lowered their growth forecasts for the third quarter due to a slowdown in retail spending..
Shares of JD.com, China’s second-largest e-commerce company, closed at $46.39 in New York, marking a 25% decline year-to-date. The company’s market value has now dropped below $90 billion, making it less valuable than its smaller rival Pinduoduo Inc..
The sell-off in JD.com’s stock was triggered by a report from Citigroup, which cut its third-quarter gross merchandise volume (GMV) growth forecast for the company from 11% to 6%, citing a slowdown in consumer spending and heightened competition from Pinduoduo..
Other analysts followed suit, with Morgan Stanley and UBS Group AG both lowering their GMV growth estimates for JD.com. Morgan Stanley expects the company’s GMV to grow by 7% in the third quarter, down from its previous forecast of 10%, while UBS predicts a growth of 8%, compared with its earlier estimate of 12%..
The downward revisions in growth forecasts reflect the broader challenges facing China’s e-commerce sector. The country’s economy has been slowing in recent months, and retail sales have been particularly weak..
In addition to the economic slowdown, JD.com is also facing increased competition from Pinduoduo, which has been gaining market share rapidly with its ultra-low prices and social e-commerce model..
JD.com has been trying to counter Pinduoduo’s challenge by investing heavily in its own social e-commerce platform, Jingxi, but it remains to be seen whether this will be enough to stem the loss of market share..
The company’s recent financial results have also been mixed. In the second quarter, JD.com’s revenue grew by 26%, but its net income fell by 34%. The company attributed the decline in profitability to increased marketing expenses and investment in new businesses..
Analysts are now expecting JD.com to report a further slowdown in revenue growth in the third quarter, with estimates ranging from 20% to 25%. The company is scheduled to release its third-quarter results on November 17..
