close
close

JD stock price plummets after Walmart sells its $3.6 billion stake

JD stock price plummets after Walmart sells its .6 billion stake
Posted on | Posted on Jasper

  • JD.com shares fell 8% on Wednesday after Walmart sold its stake in the Chinese e-commerce company.
  • Walmart sold 144.5 million shares for $3.6 billion, ending an eight-year partnership.
  • Walmart wants to focus on expanding its operations in China, which include Walmart Supercenter and Sam’s Club.

Shares of Chinese e-commerce retailer JD.com fell as much as 8 percent on Wednesday after Walmart announced the sale of its stake in the company.

Walmart sold 144.5 million shares of JD.com for $24.95 per share, for a total sale of about $3.6 billion, according to an SEC filing and a Bloomberg report.

The sale price of the shares was 11 percent below JD.com’s closing price on Tuesday. JD.com shares traded for around $26 on Wednesday, still about 4 percent above the price at which Walmart sold its stake.

Walmart’s share sale marks the end of an eight-year partnership between the two retailers, although the retail giant told the FT it still plans to work with JD.com.

Walmart initially acquired a 5 percent stake in JD.com in 2016 as it looked to expand its retail business in China, and eventually increased that stake to about 10 percent.

However, the partnership, now almost ten years old, has been impacted by the volatile economic environment in China, which is characterized by a continued slowdown in both the real estate market and overall consumer spending.

Even the subdued returns of Chinese technology stocks in recent years have not improved the situation.

The iShares MSCI China ETF is trading today at the same levels as in 2016, when Walmart completed its deal with JD.com, while the KraneShares CSI China Internet ETF has fallen about 13% since 2016.

Walmart said in a statement that the sale will enable the company to “better focus on strong China development, including operations of Walmart Supercenter and Sam’s Club, and allocate assets to other priorities.”

Walmart’s Sam’s Club business, in turn, has seen growing success in China in recent years as Chinese consumers have been attracted to the wholesale clubs’ offerings.

Walmart opened its first Sam’s Club store in China in 1996 and now operates 48 locations in the country.