Why JD.com Stock Is Falling Again Today

What happened

JD.com (NASDAQ:JD) stock is losing ground in Friday's trading. The Chinese e-commerce and logistics company's share price was down 5.9% as of 11:45 a.m. ET, according to data from S&P Global Market Intelligence.

Bearish macroeconomic trends in China are continuing to weigh on valuations of companies based in the country, and JD continues to be caught up in the trend. In addition to unexpectedly sluggish growth as the country recovers from pandemic-related lockdowns, currency concerns are now adding another bearish catalyst.

So what

The Chinese offshore yuan, which is used for transactions outside the domestic market, has seen its value tumble to the neighborhood of a 16-year low. The country's government is taking steps to boost its economy and strengthen its currency, but tumbling prices for China-based equities suggest that investors aren't optimistic that current and recently proposed measures will be enough to remedy the situation.

JD's share price slump today extends losses following the company's second-quarter earnings report, which was published on Aug. 16. The company recorded non-GAAP (adjusted) earnings per American depositary share of $0.74 on revenue of $39.7 billion in the period, while the average analyst estimate had targeted adjusted earnings of $0.68 per share on revenue of $38.5 billion. Despite recording sales and earnings that beat expectations in the period, JD stock sold off as investors became increasingly cautious about the macroeconomic picture in China.

Now what

With the stock trading at roughly 11 times this year's expected earnings and less than 35% of expected revenue JD looks quite cheap by some metrics.

JD PE Ratio (Forward) data by YCharts

On the other hand, macroeconomic headwinds and other issues in China make it difficult to assess the stock's outlook. In addition to weaker-than-expected recovery following the pandemic and recent currency issues, the country's worsening relations with the U.S. are also causing many large institutional investors to move out of Chinese stocks.

With macro headwinds hitting hard and institutional support waning, JD stock could continue to stumble even if the company posts relatively strong business results.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JD.com. The Motley Fool has a disclosure policy.