Shares of JD.com (JD +0.58%) were falling today on news that Walmart (WMT 1.10%) had dumped its stake in the Chinese e-commerce company, according to a Securities and Exchange Commission filing this morning.
JD and Walmart had been seen as partners at one point in China, but the stock sale seems to indicate that Walmart has soured on the relationship, especially after JD.com stock has underperformed for the last few years.
As of 11:38 a.m. ET on Wednesday, JD.com stock was down 5.2% on the news.
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Another setback for JD.com
The stock sale raises $3.6 billion for Walmart and ends an eight-year investment.
Walmart received a 5% in stake in the company in 2016 in exchange for selling its online grocery store Yihaodian to JD.com. At the time, the stake was valued at $1.5 billion.
In a statement reported by Reuters, Walmart said, "This decision allows us to focus on our strong China operations for Walmart China and Sam's Club, and deploy capital toward other priorities."
NASDAQ: JD
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What it means for JD.com
Walmart's stock sale is unlikely to have a direct impact on JD's business, but it's the latest sign that investors are giving up on the once-promising Chinese e-commerce sector as the company's sales growth has been sluggish since the pandemic.
Revenue in the quarter rose just 1.2% as the retailer continues to struggle with a weak consumer in China and intensifying competition from peers like PDD Holdings' Pinduoduo and ByteDance.
JD did report stronger improvement in its bottom line, but the stock is unlikely to make a recovery until revenue growth accelerates. It's not surprising that Walmart sold its shares.
