JD.com and Alibaba are facing stock price declines but may be good contrarian plays

From Nasdaq: 2024-07-31 04:25:00

JD.com and Alibaba, two major e-commerce companies in China, have seen their stock prices decline over 70% from all-time highs due to macro, competitive, and regulatory challenges. Investors are considering buying these out-of-favor stocks as contrarian plays. Both companies have focused on stabilizing and growing their operating margins with cost-cutting measures.

JD’s revenue rose 28% in 2021 but decelerated in subsequent years due to lockdowns, economic growth, and competition. Analysts expect a 5% revenue increase in 2024. Alibaba’s revenue grew 19% in fiscal 2022 but slowed in fiscal 2023 and 2024 due to macro issues and regulatory crackdowns. Analysts forecast an 8% revenue increase in fiscal 2025.

PDD, a competitor of JD and Alibaba, has been growing rapidly with a 61% CAGR from 2020 to 2023 and is expected to grow by 68% in 2024. Both JD and Alibaba have lower operating margins compared to PDD, but they have been focused on improving their margins through cost-cutting measures.

Alibaba, with its broader diversification and stronger growth rates, may be a better turnaround play than JD. The U.S.-China relationship will likely impact both companies’ stock performances, but Alibaba’s growth potential could make it a more attractive investment option.



Read more at Nasdaq: Best Stock to Buy Right Now: JD.com vs. Alibaba