Why JD.Com Inc. Shares Jumped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of JD.Com Inc. finished up 14% today in the stock's third day of public trading as the market's enthusiasm for the stock returned. 

So what: Today's gain seemed mostly due to the usual post-IPO volatility. After beginning trading at $22 following a pop from its IPO price of $19, shares of the Chinese online retailer actually fell in its first two days on the market, but today came roaring back as enthusiasm for Chinese online retailers seems to be building with Alibaba's IPO on deck. Peers in the industry, including Vipshop Holdings, have soared recently as there seems to be plenty of opportunity for growth in the sector. In its prospectus, the company said that Chinese e-commerce was expected to grow 27% this year. 

Now what: Known for its investments in infrastructure such as delivery services, which have driven consistent net losses, JD.com has drawn comparisons to Amazon.com, a stock that has a reputation for defying gravity. Also he stock was 15 times oversubscribed prior to its IPO so there is likely pent-up demand among buyers. Given those facts, I wouldn't be surprised to see JD.com shares continue to move higher.

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The article Why JD.Com Inc. Shares Jumped originally appeared on Fool.com.

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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