Why JD.com stock fell today

Shares JD.com (JD -5.66%) fell on the news today that Walmart (WMT 0.52%) The company has sold its stake in the Chinese e-commerce company, according to documents filed this morning with the Securities and Exchange Commission.

JD and Walmart were once seen as partners in China, but the share sale seems to indicate that Walmart has soured their relationship, especially after JD.com shares underperformed over the past few years.

As of 11:38 a.m. ET on Wednesday, JD.com shares were down 5.2%.

Image source: Getty Images.

Another failure for JD.com

The stock sale allowed Walmart to raise $3.6 billion and complete an eight-year investment.

Walmart received a 5% stake in the company in 2016 in exchange for selling its online grocery business Yihaodian to JD.com. At the time, the stake was valued at $1.5 billion.

In a statement published by Reuters, Walmart said: “This decision allows us to focus on our strong operations in China for Walmart China and Sam’s Club, and to allocate capital to other priorities.”

What does this mean for JD.com

Walmart’s share sale is unlikely to have a direct impact on JD’s business, but it is the latest sign that investors are abandoning China’s once-promising e-commerce sector as the company’s sales growth has been sluggish since the pandemic.

Revenue rose just 1.2% in the quarter as the retailer continues to struggle with weak competition in China and increasing competition from players like PDD Holdings Pinduoduo and ByteDance.

JD saw a larger improvement in its net income, but the stock is unlikely to recover unless revenue growth accelerates. No wonder Walmart sold its shares.