Why JD.Com (Nasdaq: JD) Stock Is Up 20% Following Today's IPO

JD.com Inc. (Nasdaq: JD) stock was up as much as 20% from its offer price on its first day of trading today (Thursday). Shares of JD reached a high of $22.80 shortly after 11:00 a.m.

The stock jumped in early trading after the company priced its shares at $19 each and raised nearly $1.8 billion. That was above the company's projected range of $16 to $18 per share.

CNBC also reported today that shares of JD stock were approximately 15 times oversubscribed, meaning 15 times as many people wanted JD shares as were made available.

JD.com is the largest online direct-sales business in China. The company operates similarly to Amazon.com Inc. (Nasdaq: AMZN). It buys products from manufacturers, stores them in warehouses, and sells them through its website.

In 2013, JD reported revenue of $11.5 billion, but actually posted a net loss of $8 million. While the net income figure is uninspiring, revenue has continued to soar. Revenue growth in 2013 was 68%, and in 2012 that figure was 96%.

By raising nearly $1.8 billion today, the JD.com IPO is the biggest initial public offering from a tech company since Twitter Inc. (NYSE: TWTR) raised $2.1 billion last November.

The JD IPO also comes during a time when the tech IPO market had slowed down. According to Dealogic, three of the last six U.S. tech IPOs had priced below their projected range.

The recent market performance of the tech sector sheds light on JD stock's impressive first day. The Nasdaq composite has dropped 3% since the beginning of March. The stocks of similar online retailers have also dropped lately, with Amazon down 23% year to date and eBay Inc. (Nasdaq: EBAY) down 7% this year.

While JD.com ran out of the gates on its IPO day, its success today and its continued success has been closely tied to its biggest competitor, Alibaba Group Holding Ltd...

How JD Stock Is an Alibaba Preview

For many, the JD.com IPO was seen as a "warm-up" to the 2014 Alibaba IPO, which many project will be the largest IPO in U.S. history.

Both are Chinese e-commerce companies, but the difference between their financials is stark.