Dada Nexus Limited

Dada Nexus (NASDAQ: DADA) is a Chinese company that operates two platforms: JD-Daojia, a local on-demand retail platform, and Dada Now, a local on-demand delivery platform. The company generates revenue by providing intra-city delivery services to JDDJ retailer customers, charging retailers commission fees for using the platform, providing online marketing services, and offering packaging services.

Recent Financial and Business Updates:

• Analysis of Second Quarter Financial Results: In the second quarter of 2023, Dada Nexus disclosed its financial performance, reporting a total net revenue of RMB2.8 billion. This represented a substantial 23.2% increase when compared to the corresponding period in 2022. Additionally, the Gross Merchandise Volume (GMV) for JDDJ over the twelve months ending on June 30, 2023, amounted to RMB70.8 billion, demonstrating a robust 29.8% growth as opposed to the same period in the previous year. Notably, Dada Nexus significantly improved its operational performance, with a reported loss of RMB197 million in Q2 2023, compared to the more substantial loss of RMB608 million in the second quarter of 2022. The net loss for the company in Q2 2023 also showed marked improvement, standing at RMB158 million, a notable reduction from the RMB578 million net loss in the corresponding quarter of 2022. Furthermore, the net loss attributable to ordinary shareholders of Dada was RMB158 million in Q2 2023, marking a positive shift from the RMB578 million loss in Q2 2022. Basic and diluted net loss per share in Q2 2023 was RMB0.15, reflecting an improvement from the RMB0.60 reported in the second quarter of 2022.
• Examination of Balance Sheet: As of June 30, 2023, Dada Nexus held a total of RMB3.945 billion in cash, cash equivalents, restricted cash, and short-term investments, which showed a decrease from the RMB4.370 billion reported as of December 31, 2022.
• Business Prospects: Looking ahead, Dada Nexus has outlined its expectations for the third quarter of 2023, with total net revenue anticipated to fall within the range of RMB2,800 million to RMB3,000 million. This projection indicates a year-over-year growth ranging from 17.6% to 26.0%. It is crucial to bear in mind that this outlook is based on the company's current preliminary expectations and is subject to potential adjustments due to various uncertainties in the business environment.

Technical Observation (on the daily chart)

Presently, the stock has corrected by approximately 75.09% since reaching its highest point in the past 52 weeks, which occurred on January 26, 2023. The Relative Strength Index (RSI) over a 14-day period stands at 43.92, recovering from oversold zone with expectations of some consolidation or a short-term upward momentum. Moreover, the price is currently positioned below both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term resistance levels.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a “SPECULATIVE BUY” rating is recommended for Dada Nexus Limited (NASDAQ: DADA) at its closing market price of USD 3.86 as on November 01, 2023. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is November 01, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.