Beast Finance's Core Viewpoints:

(1) JD.com's share price has plummeted from its all-time high of $101 to its current price of $26.56.

(2) Many investors are concerned about JD.com's future growth and competition.

(3) JD.com has become one of the most undervalued companies on Wall Street.

Due to ongoing geopolitical tensions, many Chinese stocks have seen their share prices decline. If Trump wins the presidential election, these tensions may escalate further, putting even more pressure on Chinese stocks.

Over the past few years, JD.com's (JD) share price has fallen significantly. Since reaching an all-time high of $101.25 in 2021, the stock has retreated to around $26, with its market capitalization dropping from a peak of $143.53 billion to below $39 billion.

JD.com's Financial Situation

JD.com's latest financial report indicates that its business is slowing down, which Beast Finance believes is understandable given the intensifying competition and economic slowdown.

For example, recent data shows that retail sales and industrial production in China have declined.

At the same time, competition with companies like Alibaba (BABA) and Pinduoduo (PDD) has intensified over the past few years, contributing to JD.com's business slowdown.

While JD.com's revenue exceeded RMB 291.3 billion in the last quarter (a slight increase from RMB 287 billion in the same period last year), its operating income rose from over RMB 8.7 billion to over RMB 11.6 billion.

However, Wall Street analysts believe that JD.com's days of double-digit revenue growth are over, as China's e-commerce industry is now highly mature.

This is significant for investors to note, as unlike its major competitors, JD.com has not invested heavily in overseas markets. Instead, it focuses primarily on mainland China and a few Southeast Asian countries.

Investors should not be overly concerned, though, as JD.com is not the only Chinese e-commerce company experiencing growth slowdowns.

Alibaba's recent financial report showed that its revenue grew slowly from $32 billion to $33.4 billion, whereas in the past, Alibaba's performance typically grew at double-digit rates fueled by its e-commerce and cloud businesses.

In contrast, Pinduoduo stands out as the only company achieving robust growth, with revenue increasing from $7.2 billion to $13.35 billion and net profit rising from $1.86 billion to $4.4 billion.

However, Pinduoduo also faces a crucial issue (as much of its growth stems from Temu), making it a company with significant risks (for more on Pinduoduo's risks, see previous Beast Finance articles or join our community for discussions and insights).

JD.com is now an incredibly cheap company

JD.com's plummeting share price has made it incredibly affordable. The company's current market capitalization is approximately $38.884 billion, and it recently initiated a $5 billion share repurchase program (equivalent to around 12% of its market capitalization).

In terms of balance sheet, JD.com currently holds over $11.6 billion in cash and equivalents, along with $16.15 billion in short-term investments, totaling $27.78 billion.

Additionally, it has over $1 billion in restricted cash and $9.7 billion in inventory, bringing its total current assets to $44.3 billion, with current liabilities at $38 billion.

On the other hand, it has no short-term debt and only $7.8 billion in long-term debt, meaning it can easily repay its debts with cash, leaving over $20 billion in cash reserves.

Thus, JD.com's enterprise value stands at $31.9 billion, while its market capitalization exceeds $38.8 billion. This suggests that investors do not highly value its business despite its annual profit exceeding $4 billion.

Simply put, if you acquire JD.com for over $38.8 billion, you'll obtain over $20 billion in cash. Moreover, you could recoup your investment within a decade.

However, it's crucial to note: there's a reason why JD.com's share price is cheap. As a Chinese stock, it's often unpopular in the U.S. market due to well-known reasons, and many investors remain skeptical about Chinese stocks.

Furthermore, if Trump wins the election, he's likely to impose stricter tariffs, igniting a new trade war. In such an escalated tension, Chinese stocks like JD.com could face even greater pressure.

Is this the cheapest time in JD.com's share price history?

From the weekly chart, we observe that JD.com's share price has plunged from its previous high of $101.25 to around $26 (already breaking below the 50-day and 100-day moving averages), indicating dominance by the bears.

Recently, the stock has formed a descending wedge pattern, which often precedes significant upside potential, though such upside may take time to materialize.

If this pattern stabilizes, Beast Finance believes JD.com's share price could resume its uptrend, potentially surpassing $50 in the long run.

For more detailed fundamental and technical analysis of JD.com stock, follow Beast Finance.