JD.com Offloads $65 Million Tuniu Stake Amid Weak Tourism Market

The Chinese travel company has been hard-hit by the coronavirus outbreak in the first quarter. Now, one of its long-time biggest shareholders has sold its stake.

Author: Belinda Zhou   

JD.com has unloaded its entire 21% stake in Chinese travel company Tuniu Corp. (Nasdaq: TOUR), worth $65 million.

Tuniu, a Nanjing-based online leisure travel company, said on Monday that JD Investment HK and JD Investment BVI sold 12.4 million and 65.6 million shares, respectively, to Caissa SEGA Tourism Culture Development Group Co. on June 19.

Under the agreement, the total purchase price reached 457.6 million yuan ($65.3 million), according to a filing with the U.S. Securities and Exchange Commission.

JD.com was the second-largest shareholder of Tuniu with a 21.1% stake and 14.8% voting rights as of the end of the first quarter. 

The Chinese e-commerce giant invested $50 million in Tuniu in December 2014 and then upped its stake with an additional $350 million in May 2015.

The second $350 million investment package included $250 million in cash and $100 million equivalent in resources and operational support, through which Tuniu obtained a 5-year commission-free exclusive operation in the JD.com platform.

In November 2015, Tuniu's largest shareholder HNA Tourism, with a 27% stake and 19% voting rights as of March, invested $500 million in Tuniu.

However, following the Covid-19 outbreak, Tuniu's market capitalization has declined to today's $148 million. Its stock price has plummeted over 50% since 2020. The stock of Tuniu's Chinese peer, Trip.com Group Ltd. (Nasdaq: TCOM), also slid 35% to $25.8 per ADS on Wednesday since early 2020.

Tuniu received a minimum bid price warning from the Nasdaq on May 18 for not meeting the $1 per share requirement.

The travel company reported that its revenue in the first quarter reached $24.6 million, down 62% from a year ago. Its net loss hit $29 million, or 8 cents per share, in the three months through March, up 39% year-over-year.

The lockdown restrictions have been lifted in mainland China, and recovery has been underway since April, according to both flight and accommodation bookings data from Radarbox.com. However, the recent recurrences of the virus in China have dampened the optimism. 

American management consulting firm McKinsey & Company reported in May that China's consumer sentiment survey shows that confidence in domestic travel is surging, up 60%. The consulting firm also said 60% of the Chinese people who booked trips were below the age of 30 on Tomb Sweeping Day in April and showed a possible peak recovery after September.

Tuniu, founded in 2006, offers organized and self-guided tours, as well as travel-related services for leisure travelers through its website Tuniu.com and mobile platform. Earlier this month, the company also announced a business shift in the domestic market, turning to high-quality domestic travel products to meet the near-term challenges.

The company also saw a tripled transaction volume of 1,551,000, up from 516,000 on average. 

Shares in Tuniu were trading at $1.23 per share, up 4%, as of midday Wednesday.

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