A file photo of Liu Qiangdong in Wuzhen town, Jiaxing city, East China's Zhejiang province, Dec 16, 2015. [Photo/IC]
A file photo of Liu Qiangdong in Wuzhen town, Jiaxing city, East China's Zhejiang province, Dec 16, 2015. [Photo/IC]

CEO's return fails to halt JD stock plunge

business September 05, 2018 13:33

By Zhu Lingqing
China Daily
Asia News Network
Beijing

3,553 Viewed

Chinese e-commerce giant JD's shares plunged on Tuesday, the first trading day on the Nasdaq stock market after the exposure of company founder and CEO Liu Qiangdong's arrest in the US, according to a report by wallstreetcn.com.



The US-listed JD's American depositary receipts initially fell more than 7 percent on Tuesday, then narrowed its decline and closed down around 6 percent at below $30, its lowest in the past year and a half, the report said.

While US stock markets were closed on Monday for Labor Day holiday, JD's ADR traded in Frankfurt slumped as much as 5 percent to 25.48 Euros ($29.57) on Monday and closed 2.75 percent lower on Tuesday at 25.49 Euros.

Liu, having dominated JD's "steering wheel" by holding nearly 80 percent of the company's voting rights, returned to China on Monday after he was arrested at 11:32 pm on Friday, local time, in Minneapolis on suspicion of criminal sexual conduct. He was released pending investigation at 4 pm Saturday without any charges or bail, according to the report.

On Sunday, JD announced on the Chinese social media site Weibo that Liu was falsely accused of sexual misconduct while in the US on a business trip.

As his arrest in the US has elicited an outpouring of discussions on China's social media, Liu appeared at the company's headquarters in Beijing and attended a signing ceremony with its business partner, textiles group Shandong Ruyi, on Tuesday morning.

Three US law firms — Rosen Law Firm, the Schall Law Firm and Pomerantz LLP — announced on their official websites they are investigating whether JD issued false or misleading statements on Liu's case or failed to disclose information pertinent to investors, according to a report by finance.sina.com.cn.

They will invite shareholders who suffered losses to participate in the investigation and a possible class action lawsuit.

JD shares have fallen more than 30 percent this year as of close of trading on Tuesday, the report by wallstreetcn.com said.

As China's second-largest e-commerce company, JD's performance in the second quarter of this year was worse than market expectations, according to the report.

Its net income increased by 31.2 percent year-on-year, the lowest year-on-year growth rate since listing. That figure was 122.3 billion yuan in Q2, lower than the 122.9 billion yuan expected by analysts, the report said.

In addition, net loss of its continuing operations in Q2 was about eight times as much as analysts expected and net profit of continuing operations dropped by about 51 percent year-on-year, according to the company's financial results released on August 16.

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