This Analyst Says JD.Com Fakes Volume, Has 'Misled' Investors And Is Worth 30% Less

JD.Com Inc(ADR) JD is "clearly misleading investors" about the nature of its business and faking a portion of its merchandise volume, an analyst said Wednesday.

JD, which posted about $18.52 billion in sales last year, is sometimes seen as a Chinese version of Amazon.com, Inc. AMZN.

As of earlier this year, TENCENT HOLDINGS TCEHY held a 17.6 percent stake in JD.Com, which has a market capitalization of about $48.91 billion.

The analyst, Anne Stevenson-Yang of J Capital Research, issued a Sell rating and $23.36 price target on JD.Com.

JD shares are up about 53 percent year-to-date.

Stevenson-Yang, based in China, said JD does up to 50 percent of its business by brokering sales between distributors.

"We believe much of this business occurs at a loss," the analyst said.

JD also sometimes buys from distributors and sells the products back to them at a 3 percent discount, Yang said

"The company may use accounting tricks to move subsidies onto its balance sheet as assets," according to Yang.

Part of the company's revenue, again according to Yang, is derived from buybacks that its suppliers are required to make if products do not sell.

Yang also said that land records indicate that JD has overpaid for its assets. JD has paid 20 percent more for 46 percent less land than Suning Commerce Group Co Ltd, a large Chinese retailer, buying in the same time frame, according to Yang.

J Capital Research is a registered investment advisor in the U.S. and provides research focused on China.