How Much Money Is Lacking In Jingdong? How Much Patience Can The Capital Market Have?

Recently, according to overseas media reports,

The plan is to issue $1 billion 500 million.

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Jingdong declined to comment on the foreign media coverage, but the company

The platform's worries about capital demand may also emerge.

How much money is lacking in Jingdong?

According to the data disclosed earlier by Jingdong media director Kang Jian in an interview with the media, "by the end of 2015, Jingdong's current assets amounted to 58 billion yuan, so there was no financial worries at all.

"From this point of view, the Jingdong does not seem to lack money.

According to Jingdong, its cash flow is steady, but Jingdong will focus on the rapid development of the company, rather than pursuing short-term profit targets.

At this year's Jingdong annual meeting, Liu Qiangdong has made clear the three direction of the future of Jingdong. It will focus mainly on the three major fields of e-commerce, finance and technology. The e-commerce includes Jingdong and the home of Jingdong.

In 2015, Jingdong has actively laid out strategic innovation business in finance, O2O, technology and so on. It has carried out a series of strategic investments in Yonghui supermarket, Kingdee software, daily orchard, hungry, easy car network, road cattle Network and staged music, and these investments are closely related to the ecological layout of Jingdong.

From this point of view, although Jingdong has enough liquidity, its thirst for capital is not small.

At present, the loss for Jingdong is mainly from two businesses: Jingdong's finance and finance come home, and these two funds need continuous investment.

Take Jingdong finance as an example, according to data compiled by Tencent technology, Jingdong financial loss in the first three quarters of 2015 was 677 million yuan, with a net loss rate of 53.8%.

For example, Jingdong will come home and do research and development, products, and logistics system, which will also have a lot of input.

In my article "Liu Qiangdong appealed to give up self built electricity supplier and Jingdong cash flow emergency is the root cause", we actually analyzed Jingdong's cash flow:

The benefits of huge cash flow to enterprises are self-evident.

If Jingdong's revenue is 36 billion yuan this year, a loss of 2 billion yuan, but the account period is one month. If its monthly revenue is calculated as an average of 3 billion yuan, then the Jingdong will have more than 1 billion yuan by the end of the year. The 1 billion yuan will always be in the account of Jingdong, which is the cash flow.

If the account period is extended to two months, the cash flow will be 4 billion yuan.

So as long as Jingdong's revenues are increasing and losses are not increasing substantially, Jingdong's money will last for many years.

The Jingdong's current assets largely come from the account settlement of merchants. Although these funds are in the accounts of Jingdong, they are essentially the money borrowed from merchants by Jingdong, which needs to be returned to merchants after a certain period.

Today's Jingdong is still in a deficit, although liquid assets look a lot, but if used for strategic layout will undoubtedly increase the risk of capital chain breakage, after all, belongs to the future also means that it will not be short-term investment. From this perspective, Jingdong is undoubtedly very short of money.

How much longer do we need to play in deficit games?

Not long ago, Jingdong released the fourth quarter and annual performance report for 2015. From the earnings report, Jingdong showed a polarization.

While revenues and pactions have increased significantly, losses have also expanded rapidly.

In 2015, the total revenue of Jingdong was 181 billion 300 million yuan, an increase of 58% over the same period last year, but the net loss was also 9 billion 400 million yuan, an increase of 88% over the previous year's 5 billion yuan.

The Jingdong now faces the embarrassing situation of "bigger and bigger losses".

Zhang Yi, a media consultant, told reporters: "I think Jingdong is losing money, or there is no good business in the process of operation, or is it not a benign business model." CEO

Because electricity providers are prone to losses, which has become a consensus in the electricity supplier industry, but the electricity supplier is what we need, so who can change the fate of the business model is a very important point. "

For Jingdong, out of its long-term losses, even though it has taken account of strategic layout considerations, Jingdong's finance and Jingdong's two businesses have indeed increased the imagination of the company, but fundamentally speaking, it is still a long-standing business model.

We know that Jingdong can stand out from a public e-commerce platform, largely to build its own logistics system, but the self built logistics system has also brought huge cost pressure to Jingdong. Not long ago, Jingdong increased the freight threshold, which is also behind the huge losses.

Jingdong was highly dependent on 3C appliances, but later discovered the drawbacks of this model, and began to learn from Alibaba with an open mind, and focused on pforming into a comprehensive shopping platform of the whole category. Non electric business will become an important breakthrough for Jingdong in the future.

In the short term, Jingdong's pformation seems to have been successful.

According to the 2015 earnings data, GMV for daily commodities and other commodities has accounted for 48.7% of Jingdong's total GMV.

But at the moment, Jingdong is facing a very big problem, that is, the 3C market is not guaranteed.

With Alibaba's online traffic and Suning's offline channels, Jingdong's 3C advantage is now lost.

Liu Qiangdong may also be aware of this problem and put forward the goal of "surpassing the US and Soviet Union and becoming the industry first", but for Jingdong, the first tier cities and the online industry are basically saturated.

Liu Qiangdong believes that "the core driving force of our growth is still the rapid pfer of consumers from the offline to the online. If you go to Beijing, Shanghai and Guangzhou, many computer cities and home appliance chain stores have been closed down. The degree of consumer pfer is very obvious. The next consumers are mainly from three to six line cities. Now you go to some counties, they also have computer cities, and the business is quite good. This is our future market gap.

But the offline channel has always been the advantage of Gome and Suning. Jingdong's catching up is not easy.

The story is not a permanent solution.

This is an absurd reality in the recent Harvard Business Review.

Ever since Amazon opened the business trend of "earning profits for revenue", companies struggling to make profits or even losing money have become "righteous" for a long time. They are constantly selling new models, new technologies and new businesses to the public and investors, and whether they are making profits or when they are making profits seems to be their most disdained topic.

In essence, Jingdong relies on this model.

Its history is always losing money and financing all the time.

In fact, it seems that this is true. Jingdong, which has been losing money, is naturally pleased with the story.

No money, but the total volume and net income of Jingdong are increasing every year, and the growth rate is accelerating. On the first day, it will not be profitable, but Jingdong's most powerful 3C appliances still account for only 10% of the market share. The future market imagination is still huge. No money is made, but Jingdong has already opened up two future battlefields of Finance and technology, not pursuing short-term profit targets.

Although we have seen some changes in Jingdong in recent years, from the original pure electricity supplier to the current "electricity supplier is the main business, finance is the core, technology is the future", but in the new business after burning money, when it will be profitable is still unknown.

Perhaps the Jingdong is not worried now. As long as the core business continues to maintain a high growth rate, Jingdong's story still has enough support.

But when long-term losses do not see profitability, how much patience can the capital market have at this time, and those stories that support Jingdong may no longer exist.

It is worth mentioning that Amazon's earnings report recently released nearly $596 million in 2015.

Perhaps for Jingdong, it's time to seriously consider the issue of profitability.