Chinese e-commerce giant JD.com posted its slowest quarterly revenue growth on record in the first three months of the year, as the Covid-19 lockdown in the world’s second-largest economy depended on consumer spending.
JD.com exceeds revenue estimates but misses profit expectations.
Here’s how JD did in the first quarter of 2022, vs. Refinitive Consensus:
- Revenue: 239.7 billion Chinese yuan ($ 37.8 billion) Vs. 236.6 billion yuan expected, an increase of 18% year on year.
- Net loss liable for shareholders: 3.0 billion yuan vs. 655.7 million yuan profit expected That compares with a net profit of 3.6 billion yuan in the same period last year.
18% revenue growth is the slowest quarterly growth rate in the history of JD as a public company.
JD.com shares, which were higher in U.S. pre-market trading before earnings, rallied after the company’s revenue beat, trading up 8%.
In the last three months of December, rival Alibaba reported the slowest quarterly growth rate since its 2014 listing.
As Chinese technology giants face a number of headwinds, including the Covid Lockdown, in parts of China, the financial and economic powerhouse city of Shanghai has been particularly hit. It weighed heavily on the economy as retail sales fell more than expected in March.
Major investment banks have downgraded their outlook for China’s gross domestic product growth by 2022 and expect spending to pull one into the economy.
JD’s retail division, its largest division in terms of revenue, brought in 217.5 billion yuan in revenue in the March quarter, up 17% year on year.
The Chinese firm’s logistics business, the second-largest unit, saw revenue grow 22% year-on-year to 27.3 billion yuan. JD Logistics also reduced its losses in the quarter.
JD tries to differentiate itself from e-commerce behemoth Alibaba by focusing on its logistics business and is well-known in China for same-day delivery.
“JD.com’s strong supply chain capabilities and technology-driven operating efficiency are based on our strong quarterly performance as we continue to grow healthily in a challenging external environment,” JD.com CEO Xu Lei said in a press release. Tuesday.
Controller loose ahead?
For the past 16 months, the Chinese government has been tightening internal restrictions on technology, from antitrust rules to data protection laws.
It weighed on Chinese Internet stocks with the Hang Seng Tech Index, which includes giants like Tencent and Hong Kong-listed shares of Alibaba, down nearly 46% last year.
However, there are signs that China’s crackdown on technology could ease.
In April, China’s Politburo, chaired by President Xi Jinping, pledged support for the so-called “platform economy” that refers to companies that operate online services, from social media to e-commerce.
Meanwhile, the Nikkei reported that senior Chinese officials were meeting with technology executives on Tuesday, adding the feeling that regulatory tightening could be an easy one.
JPMorgan analysts on Monday upgraded their outlook on some Chinese Internet stocks, saying “there should be a significant reduction in the uncertainty behind the recent regulatory announcement.”
On Tuesday, Chinese technology stocks rallied behind the JPMorgan note.