JD.com to Launch $5 Billion Buyback amid Increasing Concerns over Sluggish Economy

TMTPost -- China』s leading e-commerce company JD.com announced a buyback plan as investors more and more concern about the macroeconomic headwind.

Credit：JD.com

JD』s board of directors (Board)has approved a new share repurchase program effective from September 2024, according to a statement Tuesday. Under the new program, the company could buy back up to US$5.0 billion worth its shares including American depositary share (ADS) over the next 36 months through the end of August, 2027.

The proposed repurchases may be made from time to time on the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations, according to the statement. It said the Board will review the share repurchase program periodically, and may authorize adjustment of its terms and size.

The American depositary receipts (ADRs) of JD rose as much as 4.2% at the morning trade and closed around 2.3% higher Tuesday. Investors seemingly welcomed JD』s efforts to ease their concerns as China has been struggling with slowing economic growth.

JD』s long-term investor Walmart Inc. last week dumped all of its stake.has sold 144.5 million shares of JD.com for $24.95 apiece, representing its entire stake in JD for about $3.6 billion, according to a filling with the U.S. Securities and Exchange Commission (SEC) and multiple relevant reports. The sale marked an exit of Walmart』s equity investment in JD for eight years and the partnership between two companies entered a new terrain. Walmart first bought a stake in JD in 2016. The leading U.S. retailer stoke a deal in June 2016 to forge a partnership with JD.

"This decision allows us to focus on our strong China operations for Walmart China and Sam's Club, and deploy capital towards other priorities," Walmart said in the statement. It vowed to stay committed to commercial relationship with JD, which carries Walmart goods on its website, and labeled the Chinese company as a 「precious partner」.

JD』s closest rival PDD Holdings Inc. Surprised investors with a gloomy outlook Moday, raising a broader concern over the retail marke of for the world』s No.2 economy.  

While PDD』s net income rose 144% year-over-year (YoY) to RMB32.01 billion for the June quarter, topping analysts estimated RMB27.5 billion, total revenue climbed 86% YoY to RMB97.06 billion (US$13.34 billion), still missing Wall Street projection of RMB99.99 billion. The revenue, decreasing 11.8% quarter-over-quarter (QoQ),  slowed from a 131% YoY increase in the preceding quarter.

Moreover, PDD management issued severe warning about the dwindling growth amid intense competition. Co-Chief Executive Officer Chen Lei admitted the company sees many challenges ahead. 「We are prepared to accept short-term sacrifices and potential decline in profitability,」 said in a financial report Monday. During a post-earnings briefing, Chen mentioned at least eight times that revenue and profits must 「inevitably」 decline as economic growth slows. 「In the past quarter, our revenue growth rate slowed quarter-on-quarter. Looking ahead, revenue growth will inevitably face pressure due to intensified competition and external challenges,」 said Liu  Jun, VP of Finance of PDD. 「Profitability will also likely to be impacted as we continue to invest resolutely.」