JD.com (JD) Stock Jumps 6% After Michael Burry Increases Position

TLDR

• Michael Burry has sharply increased his stake in JD.com, boosting investor confidence
• Chinese stocks are broadly rebounding on signs of easing trade tensions
• JD.com issued CNY 10 billion in senior notes, strengthening its balance sheet
• The company raised its annual dividend from $0.76 to $1.00 per share
• Analysts hold a consensus “Moderate Buy” rating with a price target of $36.36

JD.com stock surged around 6% on Tuesday, with a few things happening at once to push it higher.

JD.com, Inc., JD

The biggest headline: Michael Burry, the hedge fund manager best known from “The Big Short,” has sharply increased his position in JD. That kind of move from a well-known contrarian investor tends to get people’s attention fast.

Chinese stocks have also been getting a broader lift. There are signs that trade tensions between the U.S. and China may be easing, and that’s helping sentiment across the sector. JD is catching some of that tailwind.

JD stock opened at $30.20 on Tuesday. The stock has a 52-week range of $24.51 to $38.08, so it’s sitting in the middle of that range after today’s move.

Balance Sheet Gets a Boost

On the financing side, JD.com recently issued CNY 10 billion in senior notes. That gives the company more flexibility on its balance sheet and adds to its funding options going forward.

The debt-to-equity ratio sits at a relatively low 0.21, and the company has a current ratio of 1.22, suggesting it’s in solid financial shape.

The company also raised its annual dividend to $1.00 per share, up from $0.76 previously. That’s a 31.6% increase. The ex-dividend date was April 9, with payment due April 29.

The dividend payout ratio currently stands at 55.68%, and the yield works out to around 3.3% based on Tuesday’s opening price. That kind of shareholder return is pulling in additional buyers.

Institutional Interest Is Growing

It’s not just Burry. A number of institutional investors have been adding to their JD positions in recent quarters.

U.S. Capital Wealth Advisors LLC grew its stake by 381.3% during Q4, ending up with 83,093 shares worth about $2.39 million.

Other firms including Binnacle Investments, Assetmark, and Golden State Wealth Management also increased their positions, though in smaller size. Institutional investors and hedge funds now own 15.98% of JD stock.

On the analyst front, 11 analysts currently have a Buy rating on JD, four have a Hold, and one has a Sell. The consensus price target is $36.36, which would represent upside of around 20% from Tuesday’s open.

Barclays has an “overweight” rating with a $34.00 target. Bank of America and HSBC both have Buy ratings, with targets of $33.00 and $37.00 respectively.

JD’s P/E ratio is 16.90, and analysts expect full-year EPS of $3.91. The stock’s 50-day moving average is $27.84, meaning today’s price is trading above that level.

The company reported $0.04 EPS in its most recent quarter, with revenue coming in at $50.35 billion. Return on equity was 7.56% and net margin was 1.48%.

The stock’s year-to-date performance now stands at around 4.36%.

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