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Why Vipshop Holdings Ltd. - ADR Stock Jumped Monday

By Daniel Sparks – Jan 8, 2018 at 4:46PM

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Are investors getting more bullish on this collaborative opportunity?

What happened

Shares of online discount retailer Vipshop Holdings (VIPS -1.33%) jumped as much as 10.7% on Monday, following the disclosure of an investment by Chinese internet giant Tencent Holdings (TCEHY -3.78%) and one by Chinese e-commerce company (JD -1.90%). The stock finished the trading day up about 9.5%.

In two Dec. 8 SEC filings, Tencent disclosed that it now had a 7% stake in Vipshop, and revealed a 5.5% stake.

A chart showing a stock price moving higher.

Image source: Getty Images.

So what

Tencent and's significant investments in Vipshop aren't necessarily news. Vipshop had already announced Tencent's and's commitment to buy 7% and 5.5% equity stakes in Vipshop in December.

Monday's SEC filings only confirm that the companies followed through with their agreements.

Now what

Strategic investments from Tencent and are meant to leverage and bolster each company's strengths "to form a strategic cooperative alliance aiming to achieve a deep, win-win cooperation and to benefit internet users and consumers," said Vipshop CEO Eric Ya Shen in a press release about the investments last December.

Specifically, Vipshop said it will develop a cooperation with Tencent on its Weixin platform, explore opportunities with with brand suppliers and online traffic, and more.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends and Tencent Holdings. The Motley Fool has a disclosure policy.

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