Missing The Big Picture Of JD

Missing the big picture of JD.

Sometimes, due to lack of information, investors will miss the big picture of JD.com. JD.com is an e-commerce company that rivals Alibaba in China. This stock was down over 5% after releasing their earnings today.

What brought out panic in investors/traders was looking at the wrong numbers that follow a growth stock:

1. JD grew 46% in sales year-over-year.
2. JD posted their first annual profit as a public company.
3. JD had 293 million active customer accounts, which was an increase of 29% year-over-year.
4. JD is heavily invested in artificial intelligence and data analysis.

While everyone was hoping for a huge beat due to Singles’ Day, very few investors remembered the various tactics Alibaba used to dissuade people from using JD.com’s infrastructure.

What is the main point in the case for JD? Many people want instant gratification. This viewpoint is not very prudent and mostly attest to bad traders. A company does not look at which price you bought into. The duty of JD is to be a juggernaut. It takes time to attain this goal.

JD CEO Richard Liu said: “Our unmatched online shopping experience continued to reshape Chinese e-commerce, win over consumers and drive robust growth in 2017. As we implement our vision of ‘boundaryless retail,’ we are working with top industry players to build China’s most advanced and comprehensive retail ecosystem to reach consumers wherever and whenever they shop.”

It took a while for Amazon to rule the world. What is certain, if JD were to takeover the world, it would be done way quicker with all the partnerships. People often forget that China boasts a rise in the middle-class never before seen in history. Without spending money, the company will not be able to acquire customers. Thus, market makers used this as an excuse to bring a barrage of attacks on the company.

Posting “weaker-than-expected earnings” according to some analysts means nothing to the overall picture of a company ready to take down a giant of its own. Short-sightedness will ruin an investor’s financial position in the future.

For option traders – Buy long term calls for position and short term puts for protection. At least 1/10th of your trade should be in puts.
For investors – Buy shares on any dip.

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