JD shares fall over 6% in Hong Kong as Q3 net income halves on new business losses

Chinese tech and service giant JD.com achieved revenue growth but it was offset by dramatic expenses, resulting in shareholders’ net income being chopped in half, as the Company released its third-quarter results on Thursday evening.

Non-GAAP net income attributable to ordinary shareholders reduced by 56.1%, despite the company’s net revenue in Q3 reaching 299.1 billion yuan, up 14.9% year-on-year, with its core business, JD Retail, reporting 11.4% revenue growth to 250.6 billion yuan, as highlighted in the company’s statement.

The operational loss of the company’s new business, including JD Food Delivery, JD Property, Jingxi, and overseas operations, widened dramatically more than 24 times from 615 million yuan to 15.7 billion yuan, mainly because of a 3.4 and 7.3 times increase in cost of revenue and operational expenses, respectively.

Dual-listed in the US and Hong Kong, the company’s overall marketing expenses rose 110.5% year-on-year to 21.1 billion yuan this quarter. 

Kenny Wen, Executive Committee Member of the Hong Kong Society of Financial Analysts, said that the main reasons for the situation of increased revenue but decreased profit margin are the JD price subsidy policy and its large-scale investment in new businesses.

As for the retail sector, Sandy Xu, Chief Executive Officer of JD.com, said that the electronics and home appliances category has been facing a high base since the second half of Q3, which is expected to continue in the short term, and it has been weighing on its growth momentum. 

Ian Shan, Chief Financial Officer of JD.com, said during the earnings conference call, in terms of investment in new businesses, JD will further enhance its supply, performance, and service, and bring greater growth potential through the expansion of product categories, customer groups, and regions.

Under the code 9618 in the Hong Kong market, JD.com closed at HK$116.9 on Friday, dropping by 6.03% from the previous close. The Hang Seng Index decreased 1.85% on the same day.

Wen said that JD's expansion into the Hong Kong market is logical. Expanding business outside the Chinese mainland is a necessary factor to promote the growth of JD's business.

"First, the decline of the overall market; second, capital flowing to conservative stocks; third, its new businesses, they [JD] really lost over 10 billion [yuan]," Wen said. He added that these three factors combined make the stock price decline understandable.

Wen also stated that the current stock price already reflects many of JD's negative aspects, and that JD might not be a suitable candidate for purchase for investors planning to choose the tech stock.

By the third quarter, JD had over 20 JD Malls in operation nationwide, and the number of JD Electrical Appliance city flagship stores also exceeded 100.

The first JD Mall store in Hong Kong will be located in Wan Chai and is scheduled to open in 2026.