Walmart Inc. (NYSE:WMT) has announced plans to sell its stake in Chinese e-commerce giant and Alibaba-rival JD.com Inc. (NASDAQ:JD), causing JD.com's shares to plummet. This decision comes as Walmart shifts its focus towards its own operations in China, as per the SEC filing.

What Happened: Walmart aims to raise as much as $3.74 billion by selling its stake in JD.com, Reuters reported citing a person familiar with the matter. The American retail behemoth is reportedly offering 144.5 million American depositary shares priced between $24.85 and $25.85, with Morgan Stanley as the broker-dealer.

Following this announcement, JD.com's shares fell 7.66% to $26.03 in Wednesday's pre-market trading while Walmart showed a minimal hike of 0.34% around the same time, according to Benzinga Pro.

Despite being JD.com's largest shareholder, Walmart stated that it remains committed to a continued commercial relationship with JD.com.

Walmart, JD.com and Morgan Stanley have yet to respond to Benzinga's queries.

Why It Matters: Walmart's decision to sell its stake in JD.com comes on the heels of its recent earnings surprise, which created a great trade opportunity. The company exceeded expectations on both Earnings per Share ($.67 vs $.64 expected) and sales ($169.33B vs $168.56B), pushing the stock up about 8% since then.

Analysts have highlighted Walmart's market share gains and improving gross margins in the retailer's second-quarter earnings report, making it one of the most compelling retail investments.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari