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Walmart, the largest shareholder in Chinese e-commerce startup JD.com, has formally sold its entire investment in the company.
Walmart, the largest shareholder of Chinese e-commerce firm JD.com, has officially sold its entire stake, marking the end of an eight-year investment. This strategic decision comes as Walmart aims to concentrate on its own operations in China. The placement of the Walmart shares was fully subscribed, with a value reaching up to $3.74 billion at the upper end of the offered price range.
The decision to exit JD.com reflects Walmart’s intent to refocus on its core business, particularly the Sam’s Club warehouse operations in China.
This move highlights the decreasing appeal of China’s e-commerce sector, which was once a favorite among investors but is currently facing challenges such as poor margins, intense price competition, and declining consumer demand.
Shares of JD.com have plummeted approximately 70% from their peak in early 2021, with prices hovering around 2016 levels when Walmart became a key shareholder.
Following the share sale announcement, JD.com’s Hong Kong-listed shares declined by over 10%, and its U.S.-listed shares dropped by 10% in after-market trading.
In a statement, Walmart said this decision allows them to prioritize their strong operations in China and invest capital into other opportunities. The retailer remains committed to maintaining a commercial relationship with JD.com despite the exit from the stake. JD.com, in turn, expressed confidence in future collaborations between both entities.
Walmart offered 144.5 million American depositary shares of JD.com at a price range of $24.85 to $25.85. The shares were priced at a discount of up to 11.8% relative to the closing price of $28.19 prior to the sale. Morgan Stanley acted as the broker-dealer for this transaction.
In a stock exchange filing, JD.com reported a share repurchase worth $390 million, which aligned with a broader $3 billion buyback plan approved earlier in March. Although the company posted a better-than-expected second-quarter profit, thanks to its low-price strategy, it continues to face headwinds from a sluggish retail market in China.
The competitive e-commerce environment in China has intensified, with major companies like JD.com, Alibaba, and PDD Holdings’ Pinduoduo engaged in significant price wars to attract consumers. This competitive pressure is adversely impacting revenue growth and profit margins.
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