Has JD.com Stock Plunged Enough? By TipRanks
JD.com’s stock is feeling the consequences of the Chinese market crash. After a sharp quarterly earnings report, the stock plummeted around 42% between peak and trough. However, it rebounded modestly to $76. Although there is negative sentiment about all Chinese stocks I remain bullish on this name.
China’s Stock Market Crash and JD
There’s no question that many investors are undecided about whether or not they even want to invest in China, given the plethora of risks, both seen and unseen. Indeed, the uncertainties couldn’t be greater for any Chinese companies, including the rapidly-growing best-in-breed e-commerce companies like JD.com and Alibaba (NYSE:), both of which have been on the receiving end of the current sell-off.
Investors hate uncertainty more than anything. There are still lingering fears about Chinese ADRs being delisted, and it is possible to argue that the uncertainties could not be more severe. It’s difficult to determine whether JD and other top Chinese stocks are value plays or traps. However, value-seekers looking to rest easy at night might want to consider JD as a bargain.
The incredible fundamentals and JD.com stock’s low valuation metrics have kept many investors on the sidelines. But the extreme volatility, and the negative momentum has made it difficult to believe that the company is worth the high price. Others are still waiting for negative momentum to stop. Others wait for the negative momentum to subside or change. Some people are afraid of their names after the recent crash.
You can rest easy knowing JD is your name. If the unexpected happens, I would look for a way to get into this “cheap ecommerce company.” (See JD.com stock charts on TipRanks)
Next-level Growth at Dirt-cheap Multiple
JD. Stock offers amazing growth for a reasonable multiple. It’s not difficult to see the company’s dominant position in China and its solid fundamentals. This is especially true as we get closer to Single’s Day (China’s equivalent of Black Friday).
Investors are wondering if Beijing will keep up the pressure.
Many U.S. investors have been scared away by Beijing, leading them to sell their ADRs due to deep uncertainties. The recent selling frenzy could be good news for ADR owners who are long-term. The recent Chinese equity crash may be overblown if relations between the U.S. and China improve. JD.com might have an early seat at a major relief rally.
JD.com will continue to increase its top line at double-digit rates. However, JD stock should not be expected to follow in the steps of other quarters.
Wall Street’s Take
According to TipRanks’ consensus analyst rating, JD stock comes in as a Strong Buy. Out of twelve analyst ratings, 11 recommend Buy and 1 recommendation Sell.
As for price targets, the average JD.com price target is $97.67, implying an upside of 32.3%. The price targets of analysts range from $62.00 to $125.00 per share, with a minimum of $52.00 and a maximum of $125.00.
The Bottom Line on JD Stock
In many ways, JD.com looks like an early-stage Amazon (NASDAQ:). JD.com could be able to surpass its American counterpart with its recently announced rollout of a courier robot.
JD.com may be an amazing company. It’s difficult to assess the reward/risk ratio until the regulatory risk list is lessened.
Disclosure: Joey Frenette held shares in Amazon at the time this article was published.
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