Morgan Stanley issued a Research Tactical Idea on JD.com (NASDAQ:JD) in a note Thursday, saying they believe the share price will fall in absolute terms over the next 30 days.
JD announced that it repurchased a total of 43.8mn ADS for US$1.2bn in March 2024.
Morgan Stanley explained: "Based [on] our calculations, JD's share repurchase amount accounted for ~11% of JD's trading volume (ADR + H-share) during March 8-31 (after JD reported 4Q23 results and could start the share repurchase), which supported its share price outperformance (up 14.2% from March 8-31 vs. -0.2% for BABA and -0.8% for PDD)."
However, they note that since JD is currently in a blackout period prior to its first-quarter earnings results due in mid-May, it cannot repurchase shares.
Furthermore, they expect JD Retail's 1Q24 revenue to grow 6.1% year over year, "significantly underperforming" online retail sales of goods growth at 11.6% year over year.
The bank estimates that there is about a 70% to 80%, or very likely, probability that the scenario they have put forward plays out.