Tencent to Reduce Stake in JD.com to 2.3%; Shares Slide

Nasdaq listed JD.com, Inc. (JD) revealed that Chinese social and video gaming company Tencent Holdings Ltd. (TCEHY), which owns 17% of the company’s outstanding shares, has planned to substantially reduce its stake in JD.com to 2.3%. 

Following the news, shares of the Chinese e-commerce company plunged almost 7% in the extended trading session on Wednesday and continued to fall in the pre-market trading session on Thursday at the time of writing. 

Detailed Plan 

Tencent will issue 460 million class A ordinary shares to its shareholders as an interim dividend worth around $16.4 billion. Notably, eligible shareholders of Tencent will receive one share of JD.com for every 21 shares held.  Meanwhile, the mutually beneficial business relationship, including the ongoing strategic partnership agreement between JD.com and Tencent, will continue as before.  

Official Comments 

JD.com CEO Richard Qiangdong Liu said, “We are also thrilled to welcome the shareholders of Tencent as our new shareholders. We are very proud of our technology-enabled, supply chain-based business model, which is deeply rooted in real economy and has been continuously executed by us over the past 18 years following our long-standing business principle of doing business the right way.” 

Wall Street’s Take 

On December 7, Macquarie analyst Ellie Jiang initiated coverage of JD.com with a Buy rating and a price target of $112 (51.86% upside potential).  

Consensus among analysts is a Strong Buy based on 12 Buys versus 1 Hold. The average JD.com price target of $108.92 implies 47.69% upside potential from current levels. However, shares have fallen 13.7% over the past year. 

Website Traffic 

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (NYSE: SEMR), the world’s biggest website usage monitoring service, offers insight into JD.com’s performance this quarter. According to the tool, the JD.com website recorded a 31.77% increase in global visits in November compared to the same period last year. Also, a quarter-to-date comparison showed a decrease of 44.82% compared to Q4 2021, and the year-to-date website traffic decline stands at 32.51%.

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