Chinese e-commerce giant JD.com has posted the slowest quarterly revenue growth in history in the first three months of the year as the blocking of Covid-19 in the world’s second-largest economy affected consumer spending.

JD.com exceeded revenue estimates but did not live up to expectations regarding profits.

Here’s how JD did in the first quarter of 2022 compared to Refinitiv’s consensus estimates:

  • Income: 239.7 billion Chinese yuan ($ 37.8 billion) against an expected 236.6 billion yuan, an increase of 18% over the same period last year.
  • Net loss attributable to shareholders: 3.0 billion yuan against 655.7 million yuan profit is expected. This is compared with 3.6 billion yuan in net profit for the same period last year.

Revenue growth of 18% is the slowest quarterly JD growth rate in the history of a public company.

Shares of JD.com, which were already the highest in pre-market trading in the U.S. before earnings growth, extended the rally after the company’s revenue went down, trading 8% higher.

Three months before the end of December, rival Alibaba reported the slowest quarterly growth rate since listing in 2014.

Chinese technology giants are facing a number of headwinds, including blocking Covid in parts of China, particularly hard hit the financial and economic city of Shanghai. This had a negative impact on the economy: in March, retail sales fell more than expected.

Large investment banks have lowered China’s gross domestic product growth forecast for 2022 and expect consumption to slow the economy.

JD’s retail segment, its largest revenue division, generated revenue of 217.5 billion yuan in the March quarter, up 17% from the same period last year.

The logistics business of the Chinese firm, which is the second largest unit, increased by 22% over the same period last year and amounted to 27.3 billion yuan. JD Logistics also cut its losses in the quarter.

JD is trying to differentiate itself from e-commerce giant Alibaba by focusing on its logistics business, and is well known in China for its same-day supplies.

“JD.com’s robust supply chain capabilities and technology-driven operational efficiencies underpinned our good performance during the quarter as we continued to deliver healthy growth in a challenging external environment,” said Xu Lei, JD.com CEO, in a statement. release. Tuesday.

Ahead of easing regulation?

The Chinese government has been tightening internal regulation of the technology sector over the past 16 months in areas from antitrust to data protection laws.

This has affected Chinese online stocks with the Hang Seng Tech index, which includes giants such as Tencent and shares of Alibaba, which are listed in Hong Kong, down about 46% last year.

But there are signs that China’s repression in the technology sector may weaken.

In April, China’s Politburo, chaired by President Xi Jinping, pledged to support the so-called “platform economy,” which applies to companies that run online, from social media to e-commerce.

Meanwhile, Nikkei said high-ranking Chinese officials were meeting Tuesday with technology executives, adding to the sentiment that a tightening of regulatory tightening could occur.

JPMorgan analysts on Monday improved their outlook on some Chinese online stocks, saying “significant uncertainties should start to diminish due to recent regulatory reports.”

On Tuesday, Chinese technology stocks rose on the back of the JPMorgan banknote.

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