A woman stands next to signage incorporating the logo of JD.com Inc. and the company's mascot "Joy" at the company's headquarters in Beijing, China. (PHOTO / BLOOMBERG)

JD.com Inc. slid Friday after the Chinese online retail giant flagged to investors it may sustain spending on logistics and new initiatives to continue riding the country’s online commerce boom.

The company reported a higher-than-expected 31 percent jump in December quarter revenue. The strong results means JD has a “strong foundation for investments in a range of growth opportunity,” Chief Financial Officer Sandy Ran Xu told analysts on Thursday. She declined to forecast margins in short term.

JD’s inhouse logistics network has been instrumental to buoying the company’s operations during the pandemic, when lockdowns drove a record number of consumers online

Investors have been concerned that JD’s margins will come under pressure as the Chinese company spends to maintain and expand its delivery network. Net margin in the first quarter will drop 1 percentage point, Bocom analysts Brandy Sun and Connie Gu said in a research note, in part because of investments in infrastructure.

READ MORE: JD Health jumps 56% in HK debut amid soaring demand

JD’s inhouse logistics network has been instrumental to buoying the company’s operations during the pandemic, when lockdowns drove a record number of consumers online. That fueled a surge in e-commerce for players from Alibaba Group Holding Ltd. to Pinduoduo Inc. in 2020, straining delivery networks, and questions remain about whether they can sustain growth this year.

The retailer reported sales of 224.3 billion yuan (US$35 billion) in the December quarter, outpacing the 219.52 billion yuan average of analysts’ estimates. Net income was 24.3 billion yuan.

JD’s market value has more than doubled since the start of 2020 despite a broader tech selloff that began last month. The shares fell as much as 5.8 percent in Hong Kong trading. On Thursday, the company announced its infrastructure management affiliate was raising US$700 million in a preferred share issuance co-led by Hillhouse Capital and Warburg Pincus.

Chinese e-commerce revenue should surpass 50 percent of the country’s total retail sales this year -- a first anywhere in the world, according to researcher EMarketer. JD is now preparing to spin off its logistics unit in an initial public offering that could raise roughly US$5 billion, the second debut of a subsidiary since JD Health Inc.’s 2020 coming-out party.

ALSO READ: JD.com seeks to spin-off logistics arm in separate HK listing

What Bloomberg Intelligence Says

JD.com’s profitability could keep improving as it benefits from economies of scale and operating efficiencies. The company’s increasing penetration of users from lower-tier cities may help to fund continued market-share gains vs. offline retailers, even amid intense e-commerce competition. The company operates its own fulfillment network and logistics infrastructure, and owns the inventory for a sizable portion of its sales. These strategies attract merchants and consumers who demand high-quality goods.

JD Logistics’s imminent IPO would be a milestone for its parent, which spent billions of dollars building one of China’s largest courier services and hundreds of warehouses nationwide to ensure on-time delivery and retain control over its shipping network.

Its debut however will be overshadowed by the likely withdrawal of another financial services affiliate from capital markets. JD Digits Technology Holding Co.’s filed for an initial public offering on Shanghai’s Star market but is expected to let that lapse because of tougher rules on micro-lending.