Corporate China | Weibo: JD seeks value, Tesla tries tech

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Chinese online retailer JD.com goes public on the Nasdaq Exchange. Photo: AFP

Published: 10:45am, 2 Jun 2014Updated: 12:03pm, 24 Nov 2015

E-commerce giant JD.com (Nasdaq: JD) was well represented in the microblogging realm this past week, generating debate about the company's surprisingly high valuation following its listing last month in New York. Meantime, electric car (EV) sensation Tesla (Nasdaq: TSLA) also got some new buzz from big-time booster Li Xiang, founder of the recently listed Autohome (NYSE: ATHM), who disclosed the launch of a new app and talked about the EV maker's strong early China sales.

JD was well represented in the mainstream headlines last month, after it notched a surprisingly strong IPO despite signs that the market was weakening as investors lost their appetite for China tech firms. JD's shares priced above their initially indicated range, and the stock also debuted strongly on its first trading day. Since then the shares have climbed steadily and are now 30 per cent above their IPO price, giving the company a market value of about $34 billion (HK$263 billion).

While all that looks quite good on the surface, Li Guoqing, the talkative founder of fading e-commerce rival Dangdang (NYSE: DANG), was doing some of his own analysis in what looks like his attempt to undermine a rival. That wouldn't be too difficult to understand, since Dangdang is valued at just $800 million, even though it was once China's most valuable listed e-commerce firm. Still, I have to admit there's some logic to Li's analysis.

Essentially, Li is arguing that JD's float was extremely small, meaning the company's market value would be quite easy to manipulate. According to his analysis, which looks relatively sound, JD only put 7 per cent of its shares into its float, which is already much smaller than most companies that usually put 20-30 per cent.

Meantime, JD and Tencent themselves were rushing to put the final touches on their first major cooperative project that will see the former get an exclusive series of e-commerce shopping channels on the latter's popular WeChat mobile messaging service. I use the word "rushing", because JD wants to get everything ready in time for a major promotional event it has scheduled for June 18.

JD executives Ye Changhua and Xu Lei were talking up the event on their microblogs, and I would expect the company will be under pressure to show some big sales from the promotion. Larger rival Alibaba plays similar games with its big Singles Day event each year on November 11, and I expect JD is feeling pressure to do something similar. Failure to post impressive numbers could put some downward pressure on the company's stock.