On the evening of January 8th, JD Group W, a Hong Kong stock company, disclosed that its consolidated subsidiary, Dada, had discovered some questionable behavior during its regular internal audit process, which may raise questions about Dada's online marketing service revenue and operating support costs for the first three quarters of 2023. The audit committee under Dada's board of directors has decided to conduct an independent review, which will be assisted by independent professional consultants.
According to insiders of Dada Group, the incident was discovered by Dada during an audit, or was caused by an individual suspected of committing fraud. The insider said, "We have reported the case to the public prosecution, and in addition, this matter does not involve Dada's core business, and the scope of impact is very limited.".
Subsequently, Dada Group announced that the company's estimated revenue guidance for the first three quarters of 2023 is approximately 500 million yuan from online advertising and marketing services, as well as 500 million yuan in operating and support costs, which may have been exaggerated, respectively. "Furthermore, until further notice, the company's previously provided revenue guidance for the fourth quarter and full year of 2023 should no longer be relied upon."
In the secondary market, investors interpret this event as a significant bearish sentiment. On January 8th, the Delta American stock market opened with a drop of over 30% and continued to decline, retreating more than 96% from its historical high at the end of 2020. As of the close, Dada's stock price on the US stock market was at $1.71 per share, down 45.87%, with a current market value of approximately $447 million.
Or affect last year's third quarter report data
(Image: JD Announcement)
According to public information, Dada Group is a local real-time retail and delivery platform, established in Shanghai in 2014 and listed on the NASDAQ Stock Exchange in June 2020. It has multiple branch businesses including Dada Express, JD Daojia, Dada Youxuan, and unmanned delivery.
Among them, Dada Express is a local instant delivery platform under Dada Group, with crowdsourcing as the core transportation mode. It has built a full scene service system consisting of instant delivery, on-site delivery, and personal delivery, serving well-known enterprises, small and medium-sized enterprises, and individual users in various industries.
JD Daojia, which is well-known to ordinary consumers, is a leading local instant retail platform under the Dada Group in China. With the support of Dada Express and retail partners, it provides consumers with a real-time consumption service experience of about 1 hour for supermarket convenience, fresh fruits and vegetables, medicine and health, 3C household appliances, flowers and plants, cake and food, clothing and sports, home fashion, personal care and beauty, and other massive products to be delivered to their homes. At present, Dada's express delivery service has covered more than 2700 counties and cities nationwide, and JD's home delivery service has covered over 1700 counties and cities nationwide. On August 23rd last year, JD.com announced the adjustment of its self operated product shipping standards. Consumers who purchase self operated products on the platform are eligible for unlimited free shipping for JD PLUS members throughout the year. The threshold for self operated free shipping for ordinary users has been lowered from 99 yuan to 59 yuan.
According to 21st Century Business Herald reporters, it was learned from insiders of Dada Group that this incident was voluntarily discovered by Dada during an audit, or was caused by an individual suspected of fraud. The insider said, "We have reported the case to the public prosecution, and in addition, this matter does not involve Dada's core business, and the scope of impact is very limited.".
JD.com stated in its announcement that it may raise questions about certain online marketing service revenue and operational support costs of Dada in the first three quarters of 2023.
And Dada also disclosed in a subsequent announcement: based on preliminary evaluation, the company currently estimates that the revenue guidance for the first three quarters of 2023 is about 500 million yuan from online advertising and marketing services, as well as operating and support costs of 500 million yuan, which may be exaggerated, respectively. In addition, until further notice, the company should no longer rely on the revenue guidance provided for the fourth quarter and full year of 2023.
On November 15, 2023, the company released its third quarter performance report. The financial report shows that in the third quarter, Dada Group's total revenue was 2.9 billion yuan, a year-on-year increase of 20%, and its dual platform revenue showed double-digit growth year-on-year.
In terms of business, Dada Kuaishou's revenue in the third quarter was 1.1 billion yuan, a year-on-year increase of 29%, and the platform's active knight saw a year-on-year growth of over 20%. In the third quarter, JD Daojia platform's revenue was 1.8 billion yuan, a year-on-year increase of 16%. According to the announcement, as of September 30, 2023, the total transaction volume (GMV) of JD Home platform was 73.1 billion yuan, a year-on-year increase of 24%. As of the end of September 2023, JD has over 400000 door-to-door stores.
In the third quarter of last year, Dada Group had a net loss of 9.2 million yuan under non US GAAP accounting standards. On the day of the announcement, Dada's stock price fell by 4.87%.
The stock price has retreated by over 90%
As of the close, Dada's stock price on the US stock market was at $1.71 per share, down 45.87%, with a current market value of approximately $447 million.
Looking back at the listing process of Dada Group: its predecessor, Kuaishou, was launched in 2014. At that time, the concept of instant delivery was hot, and various start-up companies of the same type emerged like mushrooms after rain. At that time, Dada was also pursued by various capital. According to CVSource's investment data, in its first year of establishment, the company received millions of dollars in Series A financing from Sequoia China; In 2015, Dada received three rounds of intensive financing, namely the $10 million Series B financing from Sequoia China and Jinglin Investment, the $100 million Series C financing from Sequoia China, Jinglin Investment, DST, and Kunlun Wanwei, and the $300 million Series D financing from Sequoia China and DST. It is worth mentioning that after Series D financing, Dada's valuation reached $1 billion.
In April 2016, Dada and JD Daojia merged. At that time, JD.com exchanged JD Daojia's assets, JD Group's business resources, and $200 million in cash for a 47% stake in the new company, becoming the single largest shareholder. In June 2020, Dada Group went to the United States to ring the bell.
In the past two years, JD has increased its stake in Dada Group for many times. As of the third quarter of last year, JD and Wal Mart had held 53.8% and 9% shares respectively, ranking first and second, followed by Kuai Jiaqi, the founder of Dada, with 4.8%.
The company's stock price once climbed to a high of $61 at the end of November 2020, but then fell along with the China Concept Interconnection sector, with a current decline of over 96%.
Not only has Dada's stock price experienced a huge correction, but Hong Kong stock market JD.com has also seen a sharp decline since the beginning of last year. After years of ups and downs, the current stock price of Zhonggai Internet is still in a downward trend. From the representative index reflecting the overall performance of Chinese internet companies listed overseas, the CSI Overseas China Internet 30 Index, as of January 8th, the latest price to earnings ratio (TTM) of the index was less than 17 times, the lowest since its listing, hitting a new historical low, and related fund products continued to weaken.
Regarding this, some fund managers have stated that although the overall performance of some leading stocks is still growing, the development of some new businesses that the market had previously hoped for did not meet expectations, resulting in a weak rise in stock prices. In addition, considering the current policy gap in China and the weak overall economic validation, the market's overall expectations for the industry have been adjusted.
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