Shares of China-based e-commerce giant JD.Com Inc (NASDAQ: JD) were trading
higher Thursday after the company is reportedly looking to restructure its largest unit by revenue.
What Happened
JD's largest unit by revenue, JD Mall, will undergo a restructuring that will see the creation of three separate business
departments, The Wall
Street Journal reported, citing internal documents. The plan was introduced Friday night and will include units that directly
service customers, business support services and infrastructure control/risk management.
A spokeswoman confirmed with WSJ that a reorganization is planned to "achieve quality growth" and to "better serve our customers
and react to their ever changing demands."
Why It's Important
JD's change comes at a time when investors are concerned with the company's corporate structure in which CEO Liu Qiangdong
controls nearly 80 percent of all voting rights, WSJ said. The company's board cannot meet without his presence unless he recuses
himself, and this became a more notable issue after the executive was briefly arrested in Minneapolis on suspicion of rape.
The Chinese company's move to change its structure could be seen as an attempt
to "change the narrative" surrounding the company, China Market Research Group's Ben Cavender told WSJ. From a public relations
point of view, the restructuring move following Minneapolis authorities declining to press any charges against Qiangdong is
encouraging, he said.
What's Next
Some uncertainty remains over what the revamped JD structure will look like, and it "doesn't change the fact that
[Qiangdong] has the voting rights and power at the end of the day," Cavender said. Other analysts told WSJ they are skeptical
the CEO will diminish his influence on JD behind the scenes.
JD.Com shares were 0.57 percent higher at $21.22 at the time of publication Thursday.
Related Links:
JD
Down After Q3 Print, But Many Analysts Remain Optimistic
Goldman
Sachs: Buy Shares Of The Fastest-Growing Internet Company In The World
© 2018 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.