China e-commerce giant JD.com plans to spend $1.5 billion to create a subsidiary to rival PDD Holdings and its shopping app known as Pinduoduo. PDD and JD stock, along with other China stocks that include Alibaba, dropped over concerns of rising competition and price wars.
According to news reports initially from Chinese media outlets on Friday, PDD and its budget-conscious shopping app known as Pinduoduo, has grown rapidly and is taking market share from JD as well as Alibaba. PDD, JD and Alibaba are the three largest e-commerce companies in China.
JD is still in the process of hammering out the details of its new strategy but plans to begin rolling out the campaign next month.
The move comes as Chinese regulators have showed signs of easing their lengthy crackdown on large China internet companies.
JD Stock: Hammering Out Details Of New Strategy
JD stock plunged 11%, closing at 47.17 on the stock market today.
Over the years, JD has built a network of sourcing, logistics and fulfillment capabilities that support its underlying businesses.
Last week, Pinduoduo changed its name to PDD Holdings but retained its ticker PDD on the Nasdaq stock exchange. PDD owns and operates a portfolio of businesses. They include Pinduoduo and Temu, an e-commerce marketplace based in the U.S.
PDD stock dropped 9.5% to 84.51. Alibaba fell 4.9% to 95.10.
Alibaba reports quarterly earnings Thursday morning, as does e-commerce company Vipshop Holdings. In addition, China search engine leader Baidu reports earnings Wednesday morning
Before Tuesday's plunge, JD stock was down 5.5% for 2023 through Friday's close. Meanwhile, PDD stock was up 14.6% and BABA shares gained 13.5%.
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