Walmart (NYSE: WMT) has been on the offensive lately. It excited investors last week with the announcement of a 3-for-1 stock split, and it captured attention again this week with reports that it might acquire smart TV maker Vizio.
But it’s probably not looking to compete with the likes of industry leader Roku (NASDAQ: ROKU). This move is more about gaining the upper hand, or at least a competing hand, in its battle for consumer spending with perennial rival Amazon.
The pressure is building on Walmart
Walmart is still the largest U.S. company by sales, but Amazon is closing the gap. Amazon’s revenue increased 12% year over year in 2023, and Walmart’s revenue increased 2.7% over the trailing 12 months. This trend has been going on for years, but Walmart is just that much bigger, and Amazon has not been able to overtake it yet.
Amazon has also been much more profitable than Walmart over the past year.
WMT Revenue (TTM)
As much as these two like to duke it out over consumer discretionary spending, there are important differences in the businesses. Most specifically, Amazon has much more going on than retail. Amazon Web Services (AWS) is a cloud computing giant that has nothing to do with retail and accounts for 14% of the company’s total sales. It also owns MGM Studios and and a large streaming network.
Amazon’s fastest-growing segment, though, is advertising, and that’s what Walmart is probably targeting with this acquisition.
Why advertising matters
Amazon has its own smart TV and streaming business, and it recently jumped on the ad-supported tier bandwagon for its Prime streaming network.
But it’s been using its e-commerce platform as an advertising base. This makes a lot of sense, since third-party sellers can benefit from Amazon’s artificial intelligence (AI) capabilities and target shoppers who are already looking for these kinds of products. The ad-supported streaming effort is new, but it should add considerable value to the ad business.
With the acquisition of Vizio, Walmart can get its own products right in the faces of viewers on Vizio’s operating system. It’s a well-matched arrangement; Vizio is Walmart’s best-selling TV brand, and Walmart is Vizio’s largest customer.
It’s also a means to get into the third-party ad business, which has much higher margins than groceries and can pump up Walmart’s profits.
Where does Roku fit in here?
Roku has the top streaming operating system (OS) in the U.S. and sells more devices than any rival, including Amazon. It has 75.8 million active accounts with 26.7 billion viewing hours versus 17.9 million Vizio SmartCast active accounts and 5.2 billion viewing hours. According to The Wall Street Journal, Roku’s OS has 25% of the U.S. market share, while Amazon has 17% and Vizio 8%.
Vizio isn’t a threat to Roku, but Roku’s stock fell on this news. It seems that investors are intimidated by the Walmart brand moving into Roku’s territory, even though Roku is holding its own against Amazon.
Will this help Walmart stock?
This isn’t the first time Walmart has tried to branch out into new businesses. It was late to the e-commerce game, and the lag may have cost it market share in the long run. It currently accounts for the second-largest e-commerce market share in the U.S., but that’s only 6.4%. Amazon accounts for 37.6%, according to Statista.
This might not move the needle for Walmart too much, even though it might be a good move to stay relevant. However, it shouldn’t affect Roku too much, either. If anything, it underscores Roku’s leadership and illustrates that it’s still the company to beat.
SPONSORED:
Should you invest $1,000 in Walmart right now?
Before you buy stock in Walmart, 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 Walmart wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
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 tripled the return of S&P 500 since 2002*.
See the 10 stocks
*Stock Advisor returns as of February 12, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Roku, and Walmart. The Motley Fool has a disclosure policy.
News Related
-
, Nov. 28 — One of the most anticipated Android releases for 2023 has been the Google Pixel 8 lineup. The Pixel series is often considered the best of what Android has to offer since it brings the true stock Android experience. The Pixel 8 Pro was globally released on ...
See Details:
Google Pixel 8 Pro Review: Is this the best Android phone of 2023?
-
A blank space or an (NR) indicates no readings received. An (e) indicates that the water level has been estimated. An (w) indicates that the conditions were very windy, resulting in an inaccurate reading. Omatjenne Dam does not have abstraction facilities. The dam contents are according to the latest dam ...
See Details:
Namwater Dam Bulletin on Monday 27 November 2023
-
Dhaka, Nov. 27 — Nobel laureate Dr Muhammad Yunus has been appointed chair of the international advisory board of Moscow’s Financial University (under the government of the Russian Federation). On November 23, he joined a high-level strategic meeting with Prof Stanislav Prokofiev, Rector of the Financial University, and his colleagues. ...
See Details:
Dr Yunus appointed chair of Moscow Financial University's international advisory board
-
In a pivotal encounter at the International Cricket Council (ICC) Twenty20 World Cup Africa Final Monday, the Cricket Cranes faced Nigeria, knowing that a win could significantly boost their chances of securing one of the coveted tickets to the 2024 T20 World Cup in West Indies and the USA.Nigeria won ...
See Details:
Victory over Nigeria puts Uganda on the brink
-
Capture 1 The Bank Ghana (BoG) Monetary Policy Committee (MPC) has maintained the key policy rate at 30 percent, while introducing additional liquidity management measures to address excess liquidity and reinforce the disinflation process. Announcing the committee’s decision on Monday following its 115th meeting, BoG Governor Dr. Ernest Addison said ...
See Details:
BoG holds policy rate at 30%, tightens liquidity measures
-
Renita Holmes has been displaced four times in the past three years by rising rents With sea levels rising around the globe, Miami, in the US state of Florida, is facing an urgent need to adapt. As property investors turn their gaze inland, away from the exclusive low-lying beach area, ...
See Details:
When sea levels rise, so does your rent
-
Picture2 In a groundbreaking moment, Mrs. Adelaide Siaw Agyepong, CEO-American International School, has achieved yet another milestone by being crowned ‘Icon of Inspiration and Impact for the Year 2023’. The crowning achievement took place in Accra, where Mrs. Siaw Agyepong surpassed contemporaries to clinch this prestigious title at the 5th ...
See Details:
American International School CEO honoured as ‘Icon of Inspiration and Impact’
-
Freetown’s streets were almost empty on Sunday after a curfew was imposed Gunmen in Sierra Leone attacked a military barracks and freed hundreds of prisoners in a “co-ordinated and properly planned” attack, the country’s information minister has said. Sierra Leoneans spent Sunday under a nationwide curfew amid disarray in capital ...
See Details:
Sierra Leone prison breaks co-ordinated - minister
-
Freetown’s streets were almost empty on Sunday after a curfew was imposed Gunmen in Sierra Leone attacked a military barracks and freed hundreds of prisoners in a “co-ordinated and properly planned” attack, the country’s information minister has said. Sierra Leoneans spent Sunday under a nationwide curfew amid disarray in capital ...
See Details:
Address the rise of single parenthood
-
Freetown’s streets were almost empty on Sunday after a curfew was imposed Gunmen in Sierra Leone attacked a military barracks and freed hundreds of prisoners in a “co-ordinated and properly planned” attack, the country’s information minister has said. Sierra Leoneans spent Sunday under a nationwide curfew amid disarray in capital ...
See Details:
Hyundai Chief Picked as Auto Industry Leader of the Year
-
Freetown’s streets were almost empty on Sunday after a curfew was imposed Gunmen in Sierra Leone attacked a military barracks and freed hundreds of prisoners in a “co-ordinated and properly planned” attack, the country’s information minister has said. Sierra Leoneans spent Sunday under a nationwide curfew amid disarray in capital ...
See Details:
Unmarried People Under 35 Outnumber Married Ones
-
Freetown’s streets were almost empty on Sunday after a curfew was imposed Gunmen in Sierra Leone attacked a military barracks and freed hundreds of prisoners in a “co-ordinated and properly planned” attack, the country’s information minister has said. Sierra Leoneans spent Sunday under a nationwide curfew amid disarray in capital ...
See Details:
European interior ministers in Hungary to discuss migration
-
Freetown’s streets were almost empty on Sunday after a curfew was imposed Gunmen in Sierra Leone attacked a military barracks and freed hundreds of prisoners in a “co-ordinated and properly planned” attack, the country’s information minister has said. Sierra Leoneans spent Sunday under a nationwide curfew amid disarray in capital ...
See Details:
Japan on the watch for unlicensed taxis around Narita airport amid foreign tourism spike
-
Freetown’s streets were almost empty on Sunday after a curfew was imposed Gunmen in Sierra Leone attacked a military barracks and freed hundreds of prisoners in a “co-ordinated and properly planned” attack, the country’s information minister has said. Sierra Leoneans spent Sunday under a nationwide curfew amid disarray in capital ...
See Details:
ECOWAS to send high-powered delegation on solidarity visit to Sierra Leone
OTHER NEWS
Despite doing education at the university, Mellon Kenyangi, also known as Mama Bear, did not think of going to class, and teaching students was her dream job.“Since it was not ...
Read more »
213 Sri Lanka Cricket’s Chairman of Selectors, Pramodya Wickramasinghe reported to the Sports Ministry’s Special Investigation Unit( SMSIU) for the Prevention of Sports Offences yesterday for the second day. He ...
Read more »
137 Malindu Dairy (Pvt) Ltd., a leading food production company in Sri Lanka, won the Silver Award in the medium-scale dairy and associated products category at the Industrial Excellence Awards ...
Read more »
Africans Urged to Invest Among themselves, Explore Investment Opportunities in Continent Addis Ababa, November 27/2023(ENA)-The Embassy of Angola in Ethiopia has organized lecture on the “Foreign Investment Opportunities in Angola ...
Read more »
144 The dynamic front row player Mohan Wimalaratne will lead the Police Sports Club Rugby team at the upcoming Nippon Paint Sri Lanka Rugby Major League XV-a-side Rugby Tournament scheduled ...
Read more »
Dozens of people living with disabilities from New Hope Inclusive in Entumbane, Bulawayo on Saturday last week received an early Christmas gift in the form of groceries. The groceries were ...
Read more »
The East African Community (EAC) Summit of Heads of State has admitted the Federal Republic of Somalia to the regional bloc, making it its 8th member country. The decision was ...
Read more »