After spending months in the $20 range, JD.com (NASDAQ:JD) rallying after its fourth-quarter report is encouraging for long-time shareholders. The company reported a profit in the period and posted revenue guidance in line with consensus. These are strong results despite yearly active customer accounts barely growing in the last year.
JD reported active customer accounts growing to 305.3 million, up from 292.5 million last year. Though not an impressive increase, the retailer still increased its China Online Retail penetration to 18.4% for the year, up from 15%. JD mall grew to RMB 447.5 million, up from RMB 356 million. New businesses increased by 144% while JD Mall growth fell to 26%, down from 40% last year.
Positive Developments
JD owes its strength to the hiring of top R&D talent to bulk up its technology infrastructure. The staff addition will help it carry out its AI-driven digital strategy. For 2019, R&D expenses will stabilize. The marketing expense ratio was only 4.7% in the fourth quarter.
Outlook
Looking ahead, JD will grow revenue by 18% - 22% in the first quarter. One negative development JD management made was that it would end the disclosure of quarterly GMV. The company reasoned that GMV is not useful in the financial analysis of the company and is only good for industry comparisons.
Having suffered many months of underperformance, JD investors may enjoy upside ahead. A trade war has not yet been resolved but if and when it does, JD is the stock to hold.
