Short sellers took bearish bets on JD.com to record levels even after Wal-Mart Stores Inc. said in its filing that it raised its stake from 5.9 percent to 10.8 percent.
Wal-Mart raised its investment after JD.com stock made a 34 percent rally in the past four months, which narrowed this year's decline to 16 percent, according to an article from technologynewschina.com.
Wal-Mart's move came at a time when JD.com's adjusted net loss is projected to increase by 10 percent to 947 million yuan ($142 million) and escalating competition with market leader Alibaba Group Holding Ltd.
JD.com's decision to expand its delivery network to smaller towns and increase its offerings has forced the company to raise spending, while the economic slowdown is posing a challenge.
"An expectation that a partnership with an American company will bring an improvement to JD.com right away may be overly optimistic," Gil Luria, an analyst who covers technology and e-commerce companies at Wedbush Securities Inc., said. "Investors need to see a competitive match-up versus Alibaba, which is a hard task now that the economic growth is slowing."
According to Wal-Mart chief executive officer Doug McMillon, about 25 percent of the global retail growth will come from China in the next five years hence the company needs to succeed in the country.
McMillon said that closer collaboration with Mal-Wart will help JD.com increase delivery speeds to rural areas.
"We believe this strategic alliance will help us grow e-commerce even faster in China," Dan Toporek, a Wal-Mart spokesman, said.
Josh Gartner, a JD.com spokesman in Beijing, however, refused to comment on JD.com's stock performance nor its partnership with Wal-Mart.
Analysts said that JD.com's operating losses may widen from 864 million in the first quarter to 1 billion yuan by the end of the year.
Last week, the number of shares borrowed to sell JD.com short increased to about 63.8 million, the greatest number since the company's IPO in 2014.
"It's more Wal-Mart's attempt to increase their exposure to the Chinese retail sector than JD.com's attempt to beat the main competitor," Michelle Ma, an analyst at Bloomberg Intelligence, said. "Alibaba has a stronger overall online platform, in terms of user traffic, engagement, the brand name and the breadth of the product offering."