11. JD.com, Inc. (NASDAQ:JD)
Short % of Shares Outstanding: 1.89%
Number of Hedge Fund Holders: 59
Forward Price to Earnings Ratio as of August 28: 6.79
JD.com, Inc. (NASDAQ:JD) is a Chinese technology-driven e-commerce company and internet service provider. The company has strong brand recognition in the region and has an unmatched fulfillment service thanks to its efficient logistics department.
It was held by 59 hedge funds in Q2 2024, with total stakes totaling $1.34 billion. Alkeon Capital Management is the top share holder of the company with a position worth $171.4 million.
The company is expected to see stable margin growth, originating from its letting go of unprofitable businesses such as Jingxi, community group purchases, and other international businesses. Management is now focused on improving its high-growth businesses.
JD.com, Inc. (NASDAQ:JD) has increased its business scale from 1P to 3P businesses, which is expected to drive more transaction volumes and enhance profitability. During the second quarter of 2024, net revenues of the company reached $40.90 billion, increasing modestly by 1.2% year-over-year due to seasonal fluctuations.
If we look at the segment-wise breakdown, the services revenue improved 6.3% year-over-year contributing around $32.83 billion to the net revenue. Despite slow revenue growth, JD.com, Inc. (NASDAQ:JD) was still able to achieve the highest single-quarter non-GAAP net profits of $2.04 billion by leveraging its large-scale supply chain advantage.
Moreover, its 5-year history also advocates for its profitability with the top line growing 17% and the bottom line growing 38% during the time. Looking ahead, management remains confident to accelerate its revenue growth, while maintaining a balance between free cash flow generating and net income.
Wall Street is also bullish on the stock, 47 analysts have a strong Buy rating on the JD, with their 12-month median price target of $40 presenting an upside of 51% from the current price level. It is also cheap at current levels as it is trading at only 7 times its forward earnings, a 58% discount to its sector, with earnings expected to grow by 27.30% during the year to reach $3.96.
Ariel Global Fund stated the following regarding JD.com, Inc. (NASDAQ:JD) in its first quarter 2024 investor letter:
“We initiated a position in China-based technology-driven E-commerce company, JD.com, Inc. (NASDAQ:JD). The brand has long been known across the region as a superior online shopping channel due to its unique first-party model and unparalleled fulfillment service underpinned by JD Logistics. Yet, a challenging macro environment drove shares lower as shoppers began seeking bargains. In response, the company made significant investments in elevating its third-party merchant platform to enhance its variety of product offerings and price competitiveness for consumers. We believe these actions will yield an improved product mix, stronger top-line growth and margin expansion on a go-forward basis.”
