Walmart sells entire stake in JD.com, reportedly for nearly $4 billion

By Louis Goss

U.S. retailing giant may focus on its own Sam's Club in China

JD.com's top shareholder Walmart has reportedly sold the entirety of its stake in the Chinese e-commerce giant for $3.6 billion, causing shares in the Beijing headquartered company to drop sharply.

Walmart sold 144.5 million shares in the Chinese retailer at a price of $24.95, marking an 11% discount on its closing U.S. share price on Tuesday, Bloomberg reported, citing people familiar with the matter.

A filing to the U.S. Securities and Exchange Commission shows Walmart, which previously owned a more than 10% stake in JD.com, ceased being a beneficial owner in the e-commerce giant after disposing of its stake on Tuesday.

The U.S. retailer, which first acquired a stake in JD.com in 2016, now intends to refocus its efforts in China towards its own Sam's Club venture, which has 45 locations across the country having first entered China in 1996, Reuters reported.

JD.com's (HK:9618) Hong Kong listed shares fell 8% in Wednesday's trading session having lost 20% of their value over the previous 12 months. JD.com's (JD) Nasdaq listed shares were down 7.2% in Wednesday's premarket session having fallen 15% over the past year.

The slump in JD.com's share price contributed to a 0.8% drop in the Hang Seng index HK:HSI, amid weakness in the region, with Chin's Shanghai Composite CN:SHCOMP and Japan's Nikkei 225 JP:NIK indexes both down about 0.3%

Walmart (WMT) first became one of JD.com's major shareholders via a deal between the two retailers which saw the U.S. giant sell its Chinese online grocery venture to JD.com eight years ago in return for a 5% stake in the firm.

JD.com shares subsequently surged by more than 200% before peaking in 2021 and later dropping back down by more than 70% from the all-time highs the stock hit in February that year.

The Chinese e-commerce giant, which was first formed in the 1990s before pivoting into the online retail market in the early-2000s, has now seen its share price sink to levels in 2016 when Walmart first acquired its stake.

Earlier this month, JD.com reported a 92% increase in its profits driven by successful cost-cutting initiatives including efforts to integrate artificial intelligence technologies into its supply chains.

JD.com's increased profitability came as the company saw its revenue rise by just 1.2% over the same period of time, in the face of a slump in China's economy and sharp competition from rivals including Alibaba (HK:9988) and PDD (PDD), which owns Temu and Pinduoduo.

"Given the similarities of product categories and strong global supply chain capability of Walmart, it is likely that all ecommerce players in China could face more intense competition in general merchandise and supermarket categories," Citigroup analyst Alicia Yap said. "As of now, we are not sure if there is renewal of the non-compete agreement."

Walmart and JD.com were contacted by MarketWatch for comment.

-Louis Goss

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08-21-24 0525ET

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