2018 is a year to forget for JD.com's shareholders
With the big drop in the share price of JD.com (NASDAQ:JD) this year, 2018 is without a doubt a year to forget for most shareholders. I did an overview of JD.com’s 3Q 2018 results in the inaugural Chinese Internet Weekly newsletter a fortnight ago. A reader requested for a more comprehensive take of what had happened to the company and the stock in particular. Hence, the motivation for this article.
JD.com started the year on a strong momentum, riding on the various initiatives from 2017. These initiatives included the opening of over 1,000 fresh food stores in China and the recruitment of Pei Jian, a renowned big data researcher and computing science professor at Simon Fraser University in Canada, to lead JD.com's then newly created data platform and product research and development department. In mid-January, Reuters ran an exclusive story on JD.com's fundraising round at its logistics unit with a target of at least $2 billion.
Throughout the first half of the year, favorable developments continued to flow out from the largest retailer by revenue in China. The climax probably came in the middle of the year, with record sales achieved during the company-initiated 618 shopping extravaganza in June, followed by the announcement of an investment by Alphabet’s Google (GOOGL)(GOOG).
The $40.50 pricing paid by Google was a small discount to the then traded price, an indication that the search giant did the deal with the intention to collaborate, rather than a focus on ROI. The potential opportunities from the synergies between the two internet giants boosted market interest in JD.com. In particular, it was hoped that the deal would help in the international expansion of JD.com, with Google helping to open doors for the former into the lucrative North American market. Unfortunately, things started to unravel beginning in June. I
