Insights

Why JD.com Stock Is Rising Today

What happened 

Shares of JD.com (NASDAQ: JD) were rising today, likely after the China-based e-commerce company indicated that it might expand into the food delivery business. 

JD.com’s stock rose by as much as 8.7% and was up by 3.7% as of 12:07 p.m. ET on Friday. 

So what 

In an interview with Bloomberg News, the chief executive of JD Retail, Xin Lijun, said that his company was considering moving into the meal delivery business. The company could reportedly use its Dada Nexus logistics affiliate, which it currently uses for some of its e-commerce deliveries. 

Image source: Getty Images.

“As for when we will start doing it, it will depend on our capacity and when we can build up a talent team,” Lijun told Bloomberg in the interview. 

JD.com already has food delivery for groceries and its e-commerce goods, but expanding into on-demand food delivery would allow the company to tap into a market that’s currently dominated by Alibaba and Meituan.

There’s nothing set in stone about the plans just yet, but investors were excited to see that the e-commerce company could potentially use its logistics skills to tap into a new revenue stream. 

Now what 

While investors were happy to hear about a potential new business for JD.com, they appeared to ignore the fact that Lijun also said Chinese consumers are curbing their discretionary spending right now. 

Like many other stocks, JD.com’s share price has been volatile lately. While investors were happy to hear of JD.com’s potential food delivery plans, shareholders may want to brace for more share price instability ahead as China continues to deal with its own economic uncertainties and rolling lockdowns due to a strict zero-COVID policy. 

Chris Neiger 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.

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