Investors who are willing to speculate on Chinese technology stocks have contradictory signals to consider. Last week, JD.com (JD) announced an aggressive stock buyback program. After three years, The State Administration for Market Regulation (“SAMR”) said that Alibaba (BABA) achieved good results related to its monopoly behavior.
PDD, which runs Temu worldwide, lost one-quarter of its value as of last week. Once considered the e-commerce darling, PDD’s executives unexpectedly warned that it could not sustain its growth rates.
On August 28, 2024, JD approved a new $5 billion repurchase program. This will run from this month through August 2027. This shareholder-friendly move should limit JD’s downside price action that started in May.
Alibaba’s downside risks did not change by much, regardless of the SAMR’s positive comment. On April 9, 2021, the firm paid a record $2.75 billion for its anti-monopoly violations. Speculators who bet that BABA stock bottomed lost money. BABA stock traded at around $230. It closed at $83.34 last Friday.
PDD’s abrupt warning on its outlook is most unusual. Still, investors who noticed that Europe and the U.S. cracked down on Temu’s poor-quality goods would have expected the bad news.
Your Takeaway
Alibaba still has insufficient growth. JD offers value but also faces competition. PDD’s stock is unlikely to return to yearly highs until it raises its outlook. That is still three months away.
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