You are currently viewing Walmart Aims to Capitalize on Substantial Value Inherent in its $2.3 billion Vizio Acquisition
Image used for information purpose only. Picture Credit:

Walmart Aims to Capitalize on Substantial Value Inherent in its $2.3 billion Vizio Acquisition

Walmart (WMT) is enhancing its advertising and media division to better compete with Amazon Prime (AMZN). The company recently announced its intention to purchase Vizio (VZIO), a smart TV manufacturer, for $2.3 billion, or $11.50 per share. Analysts believe this move will bolster Walmart’s retail media business, Walmart Connect, which experienced a 22% year-over-year sales increase in the US during the fourth quarter. Following the quarterly results and acquisition announcement, Walmart’s stock rose by 3% in afternoon trading on Tuesday. Conversely, Vizio’s stock surged by over 15%, while its competitor Roku (ROKU) declined by nearly 7%, as investors speculated about potential market share shifts. Walmart emphasizes that acquiring Vizio represents a significant opportunity for data and advertising capabilities.

“Walmart CFO John David Rainey emphasized the significance of advertising as a rapidly expanding and high-profit segment of their business during an interview on Tuesday. He highlighted that the deal with Vizio complements Walmart’s existing initiatives and provides an opportunity to utilize Vizio’s operating system to enhance customer service and leverage data for better customer connections.

Prior to the announcement, Wedbush analyst Alicia Reese noted the potential for the acquisition to be a ‘massive opportunity’ for Walmart. She highlighted the ability to utilize TV viewership data to promote Walmart products across its various platforms.

Joe Feldman, senior managing director at Telsey Advisory Group, echoed the sentiment, emphasizing the value of consumer data as Walmart seeks to expand its ecosystem, particularly with its Walmart+ membership platform, and compete with Amazon. Feldman suggested that Walmart is striving to create an offering similar to Amazon Prime, and acquiring Vizio could be a step in that direction.”

Oliver Chen, senior research analyst at TD Cowen, concurred, emphasizing that “digital advertising represents the future of Walmart.” He pointed out that TD Cowen anticipates digital advertising to yield margins exceeding 70%, positioning Walmart not only as a significant retailer but also as a “tech company.”

Read More: