JD.com, a leading e-commerce company in China and a major rival to Alibaba, has announced a significant share repurchase program. The company intends to buy back up to $5 billion of its shares over the next three years. This move follows a period of challenges for JD.com’s stock performance.
In a press release issued on Tuesday, JD.com’s board of directors approved the new share repurchase program. The program, set to begin in September, allows the company to buy back up to $5 billion of its shares, including American Depositary Shares (ADSs), over a 36-month period, ending in August 2027. JD.com has indicated that these repurchases will occur intermittently on the open market, at prevailing market prices, through private negotiations, block trades, or other legally permissible means, subject to market conditions and applicable regulations. The board will periodically review the program and may adjust its terms and size.
The share buyback announcement comes at a time when JD.com has experienced stock decline. In August, Walmart, the largest shareholder in JD.com, announced its intention to sell its stake in the company, resulting in a significant drop in JD.com’s share price. Moreover, JD.com’s stock was among the top eight large-cap losers for the week of August 18 to August 24, 2024. Additionally, JD.com’s shares traded lower in sympathy with PDD Holdings on Monday after the latter reported disappointing second-quarter sales results.
This share repurchase program is seen as a strategic move by JD.com to bolster investor confidence and support the company’s stock price. The buyback aims to demonstrate the company’s belief in its future prospects and its commitment to enhancing shareholder value. It also provides a signal to the market that the company believes its shares are undervalued and represents an opportunity for investors to acquire shares at a favorable price.
On Tuesday, during pre-market trading, JD.com’s stock was trading 3.91% higher at $26.81, according to Benzinga Pro. This indicates that investors are responding positively to the news of the share buyback program. It remains to be seen how effectively the program will contribute to the company’s long-term growth and share price performance.
