JD.com losses surge on soaring spending and investment
JD’s disappointing showing comes a day after top shareholder Tencent Holdings Ltd. reported its first profit drop in 13 years, souring sentiment on Chinese tech companies
JD.com Inc. posted a blowout loss due to increased spending and said investments in technology and logistics could affect profit forecasts for the rest of the year amid rising competition in China’s e-commerce market.
The net loss from continuing operations surged to 2.2 billion yuan ($319 million) in the quarter that ended in June, about 8 times larger than analysts expected. The Beijing-based company expects sales in the current quarter of between 104.5 billion yuan and 109 billion yuan, with the top of the range slightly below estimates.
JD’s disappointing showing comes a day after top shareholder Tencent Holdings Ltd. reported its first profit drop in 13 years, souring sentiment on Chinese tech companies. The online retailer is facing challenging times as it pushes ahead with an ambitious expansion in foreign and domestic markets. The e-commerce giant is squaring off against Amazon.com Inc. in Southeast Asia and the West, while facing rising pressure from rivals including Alibaba Group Holding Ltd. and Pinduoduo Inc. at home. Its stock has fallen by about a third since reaching a record in January. The American depositary receipts slipped as much as 7.3 percent in early trading, but were down less than 1 percent at 9:53 a.m. in New York.
“June was a heavy spending quarter and it’s obvious they had to respond to promotions that just about everybody is doing,” Kim Eng Securities analyst Mitchell Kim said. “You saw that with Vipshop and most likely you’ll see that in Alibaba’s results next week as well -- these promotions eat away on gross margins.”