JD.com (JD) Up 17 Percent in Initial Public Offering

Shares of JD.com (JD) were trading up +16.7 percent in active trading this morning, after the company had its initial public offering at $19 per share. JD.com stock is currently trading at $22.18 per share. JD.com is one of a series of large IPOs for Chinese e-commerce companies including Alibaba. The original range for the JD.com IPO was $16 to $18, but the demand for shares pushed the price up to $19 per share.

Beijing, China based JD.com or Jingdong Mall was originally known as 360Buy is the second largest e-commerce and B2C online retailer in China. The company was founded in 1998 with its B2C platform going online in 2004. Its domain name was changed from 360buy.com to JD.com in 2013. The company has over 35,000 employees and had a market share of 18.3 percent of the Chinese market as of last year. The initial public offering raised $1.78 billion from the sale of 93.7 million American Depositary Shares or ADSs. The issue had as lead underwriters Bank of America (BAC), UBS Investment Banker and Merrill Lynch. The company had already raised over $2 billion when it was known as 360Buy.com with investors such as Tiger Global Management, DST Global Funds, the Ontario Teachersâ Pension Plan and billionaire Prince Alwaleed bin Talalâ s Kingdom Holding Company. After the companyâ s IPO, JD.comâ s valuation increased to $25.7 billion at $19 per share, reflecting investorâ s hefty appetite for Chinese shares. The offering was oversubscribed by a factor of fifteen. JD.com claims it has over 30 million subscribers and saw revenue increase 70 percent to $8 billion in last yearâ s first quarter. The e-commerce industry in China is exploding, with online retailing exceeding the market in the United States. JD.com is expected to expand its customer base even further as mobile shopping continues to increase in popularity in China. JD.com is in partnership with Alibaba arch rival, Tencent, making use of Tencentâ s QQ platform. Chief Executive and founder, Richard Liu was offered a one off share based bonus of $591 million, according to an SEC filing. After the IPO, the bonus was worth $891 million, nearly half the amount of the total IPO. Liu was awarded 93.78 million shares immediately vesting restricted share units, which will give the billionaire more control of the company. The company sold over 69 million ADSs, while Tiger Global Management and Russian investment group Digital Sky Technologies sold 24.68 million ADSs. The JD.com IPO is being carefully watched by investors to gauge the upcoming Alibaba IPO, which could value the company by as much as $200 billion. With Chinese business to consumer sales expected to exceed $180 billion this year, JD.comâ s 18.3 percent share of that market could have the company showing a profit in the near future. At the current price, JD.com is worth in excess of $30.4 billion, or 2.65 times 2013 sales. With the stock trading $2 over the IPO price, the stock has potential for additional upside and indicates the Alibaba IPO will also be oversubscribed. Other News About JD.com. China's Tencent buys 15% stake in e-commerce firm JD.com Companies look to gain a larger share of the B2C market in China. JD.com restructures in advance of IPO Restructuring possibly a factor in the companyâ s IPO. Other Stocks in the News Best Buy profit beats estimates, shows signs of turnaround Companyâ s profit could indicate a stronger recovery. Finra Fines Cost JPMorgan 3 Minutes of Profit Another slap on the wrist for JPM.

Published on May 22, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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