China e-commerce giant JD.com’s 10 billion-yuan subsidy scheme fails to impress; shares hit an all-time low, erasing US$35 billion of market value
- Shares of the Chinese e-commerce platform fell to HK$116.70 on Thursday in Hong Kong, a level not seen since it began trading in the city in June 2020
- Its shares underperformed those of rivals Alibaba Group, which have dropped less than 1 per cent in Hong Kong, and PDD Holdings, which have risen 13 per cent in the US
The effectiveness of the programme, which was targeted at boosting both JD.com’s self-operated online shops and storefronts set up by third parties on its platform, was questioned by analysts at a time when investor sentiment towards the sector has soured.
“Investors still need to pay attention to the subsequent impact of the billion-yuan subsidy and the low-price strategy on the profit margin of JD.com’s retail segment,” Yu Botao, an analyst at CSC Financial.
Shares of the Chinese e-commerce platform fell to HK$116.70 on Thursday in Hong Kong, a level not seen since it began trading in the city in June 2020. The sell-off has erased 45 per cent of its market value, or HK$270 billion (US$34.5 billion), this year. Its American depositary receipt traded near a four-year low of US$29.81 on the Nasdaq after slumping by 47 per cent year-to-date.
Its shares have underperformed those of rivals Alibaba Group Holding, which have dropped 0.4 per cent in Hong Kong, and PDD Holdings, which have risen 13 per cent in the US.
JD.com, the Beijing-based e-commerce operator founded by Richard Liu Qiangdong, has fallen out of favour among investors, as its 10 billion yuan subsidy scheme launched in March to win market share from Alibaba and budget shopping app PDD, failed to make an impact. Revenue from its retail business grew by the least among the three e-commerce rivals in the quarter ending in June, stoking concerns about rising operating expenses and falling profit margins.