Why Vipshop Holdings Ltd. - ADR Stock Jumped Monday

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What happened

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Shares of online discount retailer Vipshop Holdings (NYSE: VIPS) jumped as much as 10.7% on Monday, following the disclosure of an investment by Chinese internet giant Tencent Holdings (NASDAQOTH: TCEHY) and one by Chinese e-commerce company JD.com (NASDAQ: JD). The stock finished the trading day up about 9.5%.

In two Dec. 8 SEC filings, Tencent disclosed that it now had a 7% stake in Vipshop, and JD.com revealed a 5.5% stake.

So what

Tencent and JD.com's significant investments in Vipshop aren't necessarily news. Vipshop had already announced Tencent's and JD.com's commitment to buy 7% and 5.5% equity stakes in Vipshop in December.

Monday's SEC filings only confirm that the companies followed through with their agreements.

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Now what

Strategic investments from Tencent and JD.com are meant to leverage and bolster each company's strengths "to form a strategic cooperative alliance aiming to achieve a deep, win-win cooperation and to benefit internet users and consumers," said Vipshop CEO Eric Ya Shen in a press release about the investments last December.

Specifically, Vipshop said it will develop a cooperation with Tencent on its Weixin platform, explore opportunities with JD.com with brand suppliers and online traffic, and more.

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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends JD.com and Tencent Holdings. The Motley Fool has a disclosure policy.