JD.com (NASDAQ:JD) fell 1.65% on Tuesday, ahead of its fourth-quarter earnings scheduled for March 6th, before the market opens.
The Chinese e-commerce giant is expected to post a quarterly EPS of $0.63 (-10.0% Y/Y) along with a revenue of $41.61B (-2.8% Y/Y).
The Beijing-based company not only competes for market share with Alibaba (BABA) and PDD (PDD) but is also facing a slowdown in consumer spending as the Chinese economy grapples with issuing miring its real estate sector.
Last week, JD.com announced that it would cut its cloud computing pricing, days after rival Alibaba (BABA) said it would do the same.
This price comparison activity is targeted at specific cloud service providers. The price drop would be 10% below an undisclosed rival, the company said on its official WeChat account.
Looking ahead, as Beijing aims to spur back the momentum in its economy, Chinese officials branded 2024 as the “Year of Consumption Promotion”, on the heels of the country’s Lunar New Year celebrations.
However, analysts have expressed doubts that consumer spending would remain strong. Nomura recently warned that China’s economy could worsen into the spring because Beijing has not been able to revive the real estate sector.
Since the start of the year, JD shares have fallen about 25%, while on a 12-month reading, the stock is down about 54%.
“JD.com has a good chance of reporting better-than-expected results, but the company will not showcase any extraordinary or explosive business growth for sure,” said SA Analyst Jonathan Weber.
The good news is that very strong growth isn’t needed when JD.com trades at a very undemanding valuation, the analyst added.
Over the last two years, JD has beaten EPS estimates 100% of the time and has beaten revenue estimates 75% of the time.
Over the last three months, EPS estimates have seen one upward revision and eight downward. Revenue estimates have seen three upward revisions and four downward.