JD.com Announces New Share Repurchase Program

JD.com (NASDAQ: JD) shares rose approximately 4.65% in premarket trading on Tuesday after the Chinese e-commerce giant announced a new share repurchase program.

The company’s board of directors approved this plan, effective September 2024, which allows JD.com to buy back up to $5 billion worth of its shares over the next 36 months. The repurchase program is set to conclude in August 2027.

This move is perceived as a strong signal of confidence from the company. JD.com’s buyback strategy has significantly contributed to maintaining investor interest, especially in a market where tech companies increasingly return capital to shareholders.

Citi analysts had anticipated the announcement, placing JD.com on a 30-day upside Catalyst Watch in expectation of a new buyback plan. They pointed out the company’s rapid utilization of previous buyback authorizations, noting that JD.com exhausted its $3 billion repurchase program announced in March 2024 within just five months.

“JD is among the notable ones that have stepped up their buyback pace aggressively,” the bank stated in its note last week. “After utilizing $2.1 billion out of its previous 2020-21 $3 billion buyback program as of March this year, it took only about five months for JD to fully utilize the latest $3 billion repurchase authorized and announced in March 2024, demonstrating JD’s commitment to shareholder return.”

As there is no outstanding amount left in any of JD’s repurchase programs, Citi suggests it is highly likely that JD will seek board approval and announce a new buyback program before the 3Q24 earnings result. This would support the share price, prompting them to open a 30-day positive Catalyst Watch.

With a substantial cash reserve of $20.2 billion, Citi maintained a Buy rating on JD.com, viewing the stock as attractively priced.