[Update] JD.com (JD)
I will start with the part I am least proud of.
Over the last year I had an unusually strong run in China. I was early and aggressive on Alibaba and Baidu calls, and I was lucky enough to take a lot of those chips off the table close to the recent highs. I still own some longer dated Alibaba calls, but most of the heavy exposure has been trimmed.
On the back of that success, I reached for more.
JD looked cheap, sentiment was awful, and I convinced myself I was “upgrading” the return profile by using options instead of just buying the stock. So I bought January 2026 calls…
I’ve now sold those calls at roughly an ~80% loss. The only real silver lining is the tax benefit, which feels a bit like your accountant handing you a warm towel after you’ve just been slapped across the face.
Technically helpful, spiritually disappointing.
The truth is I stepped outside the lane I actually understand. Alibaba, Tencent, and Baidu are businesses I know well and feel comfortable owning because the tailwinds and catalysts are clear to me. JD has never sat in that category, and the market reminded me of that in a way I won’t forget.
There is no crying in the casino. You take the lesson, you log the tax loss, you move on.
Q3 2025 Results
First, the quarter itself, or at least the “highlights”…
Net revenue: RMB 299.1 billion, up about 15 percent year on year.
Non-GAAP operating income: collapsed from RMB 13.1 billion a year ago to about RMB 0.2 billion. Margin went from 5.0 percent to 0.1 percent.
Non-GAAP net income: fell from RMB 13.2 billion to RMB 5.8 billion. Margin shrank from 5.1 percent to 1.9 percent.
Free cash flow (TTM): about RMB 12.6 billion, far below the 30–40 billion JD used to generate.
Working capital: inventory and receivable days have crept higher, not what you want in a low margin retail model.
Segments
JD Retail grew revenue and expanded operating income.
JD Logistics grew revenue but saw operating income fall.
New Businesses ramped revenue but widened operating losses to roughly RMB 15.7 billion.
So the top line is fine. Services and logistics are growing. The problem is that almost none of this shows up as profit or cash.
That is how a stock stays deep value for a long time.
Quick Commerce
A big part of the margin collapse sits in New Businesses, which includes JD’s push into quick commerce and instant delivery.
This is where my skepticism really kicks in.