DDL stock has confirmed a bullish J Hook pattern on December 31, 2021. The pattern appears to be in part from a $30 million share buyback program announced by the company.
Dingdong Announces US$30.0 Million Share Repurchase Program
On December 20, 2021, Dingdong (Cayman) Limited (“Dingdong” or the “Company”) (NYSE: DDL), a leading and the fastest growing on-demand e-commerce company in China, today announced that its board of directors has authorized a share repurchase program under which the Company may repurchase up to US$30.0 million of its shares over a period until December 19, 2022.
The Company’s proposed repurchases may be made from time to time on the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations. The Company’s board of directors will review the share repurchase program periodically, and may authorize adjustment of its terms and size. The Company expects to fund the repurchases out of its existing cash balance.
Dingdong (Cayman) Limited is a leading and fastest-growing on-demand e-commerce company in China providing users with fresh produce, meat and seafood, and other daily necessities through a convenient and excellent shopping experience supported by an extensive self-operated frontline fulfillment grid. From its core product category of fresh groceries, Dingdong has expanded to provide other daily necessities to grow into a leading one-stop online shopping destination in China for consumers to make purchases for their daily lives. At the same time, Dingdong is working to modernize China’s traditional agricultural supply chain through standardization and digitalization, empowering upstream farms and suppliers to make their production more efficient and tailored to actual demand.
Dingdong initiated with an Underweight at JPMorgan
On November 19, 2021, JPMorgan analyst Andre Chang initiated coverage of Dingdong with an Underweight rating and $21 price target.
Dingdong (Cayman) Limited Announces Third Quarter 2021 Financial Results
On November 15, 2021, Dingdong (Cayman) Limited (NYSE: DDL) announced its unaudited financial results for the third quarter ended September 30, 2021.
Third Quarter 2021 Highlights:
- GMV for the third quarter of 2021 increased by 107.7% year over year to RMB 7,018.5 million (US$ 1,089.3 million) from RMB 3,379.0 million in the same quarter of 2020.
- Total revenue for the third quarter of 2021 increased by 111.0% year over year to RMB 6,189.5 million (US$ 960.6 million) from RMB 2,933.5 million in the same quarter of 2020.
- The number of average monthly transacting users for the third quarter of 2021 increased by 120.3% year over year to 10.5 million from 4.8 million in the same quarter of 2020.
- The number of frontline fulfillment station was 1,375 as of September 30, 2021, increased from 711 as of September 30, 2020.
Mr. Changlin Liang, Founder and Chief Executive Officer of Dingdong, stated, “In the third quarter, we proactively adjusted our strategic focus to “Efficiency first, with due consideration of scale.” As such, we rapidly improved efficiency and significantly narrowed our non-GAAP net loss margin. We are confident that we will further reduce the non-GAAP net loss margin substantially in the fourth quarter. We are more optimistic now than we were during the IPO process about our expected profitability timeline. China has transitioned from an era of simply meeting basic human needs to a period of prosperity, leading to tremendous changes in people’s consumption habits. This is a momentous era. Through deeper engagement in our supply chain and enhancement of our product development capabilities, we will live up to the opportunities presented by the times, create value for consumers, and generate long-term returns for our investors.”
Ms. Le Yu, Chief Strategy Officer of Dingdong, stated, “For the fourth quarter, we will remain focused on serving higher-value users, improving our non-GAAP net loss margin, and growing our GMV on a year-over-year basis. We will continue to improve our gross margin while further benefiting from our upfront investments in the supply chain, increasing the GMV contribution from our private label brands and in-house products, and optimizing our product mix. In terms of non-GAAP net loss margin, we expect to achieve a greater sequential improvement in the fourth quarter than in the third quarter. In Shanghai, the home of our first operation, we expect our unit economics to reach breakeven in the coming quarter, driving unit economics in the Yangtze Delta region to steadily turn positive in the future.”
Third Quarter 2021 Financial Results
Total revenues were RMB 6,189.5 million (US$ 960.6 million), representing an increase of 111.0% from the same period of 2020, mainly driven by the robust growth in the Company’s GMV.
- Product Revenues were RMB 6,122.3 million (US$ 950.2 million), an increase of 111.2% from RMB 2,899.2 million in the same quarter of 2020.
- Service Revenues were RMB 67.2 million (US$ 10.4 million), an increase of 95.9% from RMB 34.3 million in the same quarter of 2020.
- Total operating costs and expenses were RMB 8,208.3 million (US$ 1,273.9 million), an increase of 117.3% from RMB 3,777.4 million in the same quarter of 2020, mainly driven by the increase in business scale.
Basic and diluted net loss per share were RMB 6.19 (US$ 0.96), compared with RMB 14.14 in the same quarter of 2020. Non-GAAP net loss per share, basic and diluted, was RMB 6.08 (US$ 0.94), compared with RMB 14.11 in the same quarter of 2020. The weighted average number of ordinary shares outstanding used to compute the basic and diluted net loss per share and non-GAAP net loss per share was 64,908,700 in the third quarter of 2020. All the then outstanding convertible redeemable preferred shares were not included in the computation until July 2021 when converted into ordinary shares after the Company’s IPO.
Cash and cash equivalents and short-term investments were RMB 6,816.7 million (US$ 1,057.9 million) as of September 30, 2021, compared with RMB 2,382.4 million as of December 31, 2020.
📽 Companies like Dingdong must focus on their ‘true margin’ before anything else, expert says
📈 DDL Stock Technical Analysis
The short-term trend is negative, as is the long-term trend. DDL is part of the Food & Staples Retailing industry. There are 47 other stocks in this industry, of which all are performing better than DDL. DDL is currently trading in the lower part of its 52-week range, which is not a good signal considering that the S&P500 Index is trading near new highs. Considerably lower volume is observed in the last couple of days, which is not what you would like to see during a strong up movement. There is a support zone ranging from 13.17 to 13.18. This zone is formed by a combination of multiple trend lines in multiple time frames. The technical rating of DDL is bad and it also does not present a quality setup at the moment. Price movement has been a little bit too volatile to find a nice entry and exit point. It is probably a good idea to wait for a consolidation first. Click here to sign up for email alerts on when DDL consolidates and is a good long entry.