Shares of JD.com ( JD -5.32% ) dropped today following reports that Walmart ( WMT 0.68% ) had sold off its shares in the Chinese e-commerce firm, as revealed in a Securities and Exchange Commission filing earlier today.
JD and Walmart were once considered partners in China, but the sale of stock suggests that Walmart’s view of the relationship has changed, particularly since JD.com’s stock has not performed well in recent years.
By 11:38 a.m. ET on Wednesday, shares of JD.com had fallen by 5.2% due to the announcement.
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JD.com faces yet another obstacle
Walmart’s sale of its stock generates $3.6 billion and concludes an eight-year-long investment.
In 2016, Walmart acquired a 5% interest in the company by trading its online grocery platform, Yihaodian, to JD.com. This stake was valued at $1.5 billion at that time.
According to a statement reported by Reuters, Walmart mentioned that this choice enables them to concentrate on their robust operations in China for both Walmart China and Sam’s Club, while also allocating funds to other important areas.
The implications for JD.com
Walmart’s decision to sell its shares is not expected to directly affect JD’s operations. However, it serves as the newest indication that investors are losing confidence in the previously promising Chinese e-commerce sector. commercial industry since the pandemic, the company’s sales have been growing slowly.
In the quarter, the retailer’s revenue increased by only 1.2% as it continues to face challenges due to a sluggish consumer market in China and growing competition from similar companies. PDD Holdings’ Pinduoduo and ByteDance are two companies.
JD did show a significant boost in its profits, but the stock probably won’t rebound until there’s an increase in revenue growth. It’s understandable why Walmart decided to sell its shares.
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