Why Dada Nexus Stock Rocketed Almost 22% Higher on Tuesday
Chinese delivery company Dada Nexus (NASDAQ: DADA) was the subject of some rather impactful news on Tuesday. Its former strategic investor sold all of its shares in the delivery company to one of Dada's peers in a move that excited investors. In this market, they piled into Dada's American depositary shares (ADS) to the point where the stock closed the day nearly 22% higher. Making the company a particular outlier was the fact that the S&P 500 index traded flat across that session.
American sell-off in China
In a regulatory filing, Dada revealed that a subsidiary of U.S. retail giant Walmart has sold its entire stake in the Chinese company. All told, the Walmart unit, Global Pinnacle Corporation, divested nearly 87.5 million of Dada's ordinary shares and slightly under 1.9 million of its ADS. The buyer was Chinese online retailer JD.com.
Walmart's stake comprised slightly over 9% of Dada's equity. With the shift in ownership, JD.com, already a major Dada shareholder, increased its majority stake in the company to more than 63%.
Meanwhile, the CEO of the Walmart China division, Christina Zhu, relinquished her seat on Dada's Board of Directors, effective immediately.
Deja vu all over again
Speaking of JD.com, it and Walmart made the news in August when the latter sold out of a similarly proportioned stake in JD.com. Taken together, the two moves show a definitive change in strategy with the Asian market for the American retailer; now that it's established as a go-to retailer in that country, it likely doesn't feel the need to hold positions in sector peers and rivals. Meanwhile, JD.com's purchase strongly indicates its confidence in Dada's potential.
Should you invest $1,000 in Dada Nexus right now?
Before you buy stock in Dada Nexus, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Dada Nexus wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $715,640!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of September 16, 2024
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JD.com and Walmart. The Motley Fool has a disclosure policy.
Why Dada Nexus Stock Rocketed Almost 22% Higher on Tuesday was originally published by The Motley Fool