JD.com, Inc. (JD): A Bear Case Theory

We came across a bearish thesis on JD.com, Inc. on Coughlin Capital’s Substack by Brian Coughlin. In this article, we will summarize the bulls’ thesis on JD. JD.com, Inc.'s share was trading at $29.83 as of November 28th. JD’s trailing and forward P/E were 9.94 and 9.92 respectively according to Yahoo Finance.

JD.com, Inc. operates as a supply chain-based technology and service provider in the People's Republic of China. Over the past year, JD.com has shown strong top-line growth, but the fundamentals reveal a more cautious picture for investors. Q3 2025 results highlighted revenue of RMB 299.1 billion, up roughly 15% year-on-year, signaling that the company’s retail and logistics segments continue to expand.

JD Retail not only grew revenue but also improved operating income, while JD Logistics posted higher revenue despite a decline in operating income. However, New Businesses, which includes JD’s push into quick commerce and instant delivery, saw operating losses widen to RMB 15.7 billion, putting pressure on overall profitability. Non-GAAP operating income collapsed from RMB 13.1 billion to just RMB 0.2 billion, with margins shrinking from 5.0% to 0.1%, and free cash flow fell sharply to RMB 12.6 billion from previous levels of RMB 30–40 billion, underscoring the challenges of translating revenue growth into sustainable earnings.

Working capital pressures, including higher inventory and receivable days, add to the strain on a low-margin retail model. While the company continues to innovate and expand services, the lack of profit generation and the deepening losses in new initiatives suggest that JD remains a deep-value story with significant operational risks.

For investors, this combination of strong top-line growth but collapsing margins and cash flow challenges indicates a cautious stance, as the market is likely to remain skeptical until the company can convert its revenue momentum into consistent profitability. Given the structural and execution risks, JD currently reflects more of a bearish case, with potential rewards limited relative to the operational headwinds and margin pressures the business faces.

Previously we covered a bullish thesis on JD.com, Inc. (JD) by BlackSwan Investor in March 2025, which highlighted the company’s strong brand, direct-sales model, operational efficiency, and expansion into food delivery. The company's stock price has depreciated approximately by 26.79% since our coverage. This is because the thesis didn’t play out. Brian Coughlin shares a contrarian view but emphasizes JD’s collapsing margins and deepening losses in new businesses.

JD.com, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 54 hedge fund portfolios held JD at the end of the second quarter which was 66 in the previous quarter. While we acknowledge the potential of JD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.