JD.com Q1 results show COVID is still impacting results, but market share gains continue
JD.com (NASDAQ:JD) reported first-quarter results on Tuesday that topped estimates and even though the COVID-19 pandemic is still impacting the company's figures, the underlying trend of it gaining market share is still at play, according to investment firm Mizuho.
Analyst James Lee, who rates JD.com (JD) shares buy with a per-share price target of $90, noted that the company's "competitive advantage" in both supply chain and logistics have allowed it to gain share and with management keeping an eye on costs, this bodes well for shares.
"With COVID a short-term headwind, we are maintaining our [fiscal 2024] EBITDA of 51 [billion] [renminbi]," Lee wrote in a note to clients, adding that JD.com (JD) is still a "top pick" among the Chinese internet stocks.
JD.com (JD) shares fell slightly more than 2% to $52.47 in mid-day trading on Wednesday.
In addition, Lee noted that certain categories, such as electronics and home appliances saw strong revenue growth compared to expectations, while general merchandise growth of 21% year-over-year performed in-line with expectations. 
JD.com's (JD) third-party business continued to show strength, with 25% year-over-year growth, compared to 16% growth for its first-party business.
As the company is more levered towards the top China markets such as Beijing and Shanghai, revenue growth later in the quarter slowed because of lockdowns, but with Mizuho estimate COVID-19 related lockdowns normalize next month, this should bode well for JD.com's (JD) annual promotions. 
"Historically, the June sales event accounts for 50% of revenue in [second-quarter] and we expect pent-up demand during the annual promotion," Lee explained, adding that revenue growth in the second-quarter is likely to be the trough and there should be a "meaningful rebound" in the second-half of the year. 
On Tuesday, China's Vice Premier, Liu He, told some of the country's leading technology executives, including those at JD.com (JD), to expect the relationship between their businesses and the Beijing government to be "properly managed."