Chinese policymakers want to boost consumption and JD.com (JD) is seeing the fruits of those efforts, it seems, as the online retailer posted better-than-expected profits in the fourth quarter despite increasingly tough competition. As the National People’s Congress meeting gets underway in Beijing and officials prioritize increasing consumer spending in 2025, JD’s results pointed to improving consumer trends at just the right time.
JD topped market expectations for quarterly revenue on Thursday, as heavy discounting and price cuts spurred a 13.4% rise in Fiscal fourth quarter revenue. Earnings almost trebled, meanwhile, as net income attributable to shareholders was RMB9.9 billion ($1.4 billion) for the fourth quarter of 2024, compared to RMB3.4 billion for the fourth quarter of 2023.
CEO Sandy Xu cited “rebounding consumption” in the last quarter as topline growth returned to double digits year-on-year. “In addition, most of our product categories as well as key metrics such as our quarterly active users and shopping frequency saw strong double-digit growth year-on-year in Q4,” he said.
Elaborating, CFO Ian Su Shan said sales momentum was “broad-based across multiple categories and revenue streams, reflecting positive macro consumption trends.” Indeed, sales growth came despite a tougher e-commerce landscape in China as the likes of discounter PDD’s (PDD) Pinduoduo gains market share.
China Wants Consumers to Spend More
Beijing’s policymakers are in a headlong rush to improve consumption trends in the country, which have consistently lagged its production capacity. China’s retail sales rose by 3.7% year-on-year in December 2024, accelerating from November’s three-month low of 3.0%.
However, consumption trends are well down on the +10% growth experienced consistently in the years before the pandemic, presenting China’s leaders with a headache as the rest of the world struggles to absorb output from the second largest economy and tariffs threaten to create further headwinds to growth.
As the economy matures from being a manufacturing export-led affair, domestic consumption becomes more important. So getting Chinese consumers to spend more was placed at the top of Beijing’s priority list for 2025, according to a government work report shared on Wednesday, placing it ahead of technology and industrial production in the pecking order of needs. Speaking on Wednesday, Chinese Premier Li Qiang’s promised a “special action plan” for boosting consumption and stimulating domestic demand as Beijing targets annual growth of 5% in 2025.
As part of this, Finance Minister Lan Fo’an said on Thursday that China has more room to act on fiscal policy to stimulate demand in the economy.
Is JD.com Stock a Good Buy?
On Wall Street, analysts have a Strong Buy consensus rating on JD stock based on eight Buys and one Hold recommendation assigned in the past three months. The average JD stock price target is $50.13, implying an upside potential of about 15%, however analysts may update their targets in the wake of the earnings.
