Shares of Chinese e-commerce giant JD.com (NASDAQ: JD) fell roughly 3% in U.S. morning trading after the company reported second-quarter results that beat revenue expectations but highlighted ongoing questions about profitability and sustainability.
JD.com reported revenue of 356.66 billion yuan ($49.7 billion), representing a 22.4% year-over-year increase and surpassing analyst consensus, largely driven by strong demand in electronics and appliances. Much of this growth was supported by state subsidies and aggressive discounting strategies.
CEO Sandy Xu highlighted that JD’s new food-delivery business is already contributing to core retail traffic. However, she cautioned that rising competition and margin pressures remain significant risks, with intense pricing competition potentially impacting merchant economics. Analysts noted that much of the revenue upside came from heavily subsidized categories, which could create tougher year-over-year comparisons in upcoming quarters.
JD.com is also exploring international expansion, including a proposed bid for European retailer Ceconomy, signaling management’s focus on diversifying growth levers beyond core retail operations. Despite strong top-line performance, net income fell to 6.2 billion yuan from 12.6 billion yuan in the prior year, reflecting the costs associated with promotions and subsidies.
Investors will be closely monitoring how JD manages margins, the intensity of promotional activities, and the effectiveness of new initiatives in translating revenue growth into long-term sustainable profitability.
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