The firm expects that Tencent's e-commerce ambitions 'will likely be an overhang, at best' on JD.com.
Investors should step to the sidelines on JD.com which is facing growing competition from Tencent, according to Loop Capital. Analyst Rob Sanderson downgraded JD.com shares to hold from buy, citing rising competition that he expects will weigh on the stock. "We continue to believe the company is undervalued and see potential for meaningful upside over the long-term, but no longer see conditions for valuation unlock in the near-term," Sanderson wrote in a Thursday note.
The stock dipped by about 0.3% in Friday premarket trading. In the near term, the analyst expects that the e-commerce company could continue to get a boost as a reopening in China buoys discretionary categories. However, he expects that "Tencent's ecommerce ambitions will likely be an overhang, at best" as the multimedia conglomerate charges commissions for merchandise sales on its livestreaming platform.
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