Walmart Inc. Plans to Divest Stake in JD.com Amidst Market Challenges

​Walmart Inc. seeks to raise $3.74 billion by divesting its stake in the Chinese e-commerce firm JD.com Inc., effectively ending an eight-year partnership in a retail sector currently facing an economic downturn and fierce competition.​

According to sources familiar with the matter, the US retailer is offering 144.5 million shares at a price range of $24.85 to $25.85. Morgan Stanley is the broker-dealer facilitating the offering. As per Bloomberg calculations, this price range represents a discount of up to 11.8% compared to Tuesday’s closing prices.

Impact on JD.com Stock:

Following the announcement, JD.com’s shares on the Hong Kong Stock Exchange declined 11%. This potential divestment aligns with Walmart’s efforts to refine its strategy in the world’s second-largest economy, where competition is primarily dominated by online platforms such as Alibaba Group Holding Ltd. and PDD Holdings Inc., which owns Temu.

The decision to sell comes amid a property crisis, market volatility, and uncertain job prospects, adversely affecting Chinese consumer spending. Walmart, JD.com, and Morgan Stanley representatives did not respond immediately to requests for comment regarding the sale.

Successes and Struggles in the Retail Landscape:

While Walmart’s Sam’s Club has emerged as a shining success within the company by offering premium goods through a membership model, other outlets in China face challenges as competitors entice cash-strapped consumers. Recently, Alibaba also surprised the market by announcing a contraction in its primary commerce business during the June quarter—further indicating a downturn in the retail environment.

JD.com’s Performance:

Despite a positive surprise in JD.com’s June quarter results, where it exceeded expectations even with modest revenue growth of just 1.2%, the overall consumer landscape is deteriorating. The company has experienced a series of single-digit revenue growth quarters since 2022, significantly reducing its market value by half since the beginning of last year.

Conclusion of the Partnership:

The share sale marks the conclusion of a partnership that began in 2016 when Walmart acquired a 5% stake in JD.com. This initial agreement included JD.com taking over Walmart’s Yihaodian online marketplace, which had targeted higher-end female consumers in major Chinese cities. Later that year, Walmart increased its investment in JD.com to 10.8%.