Walmart Inc (NYSE: WMT) is in the news after it was reported that the company is planning to launch a streaming service to rival giants like Netflix and Amazon. If true, this would be a big step from Walmart towards a huge growth catalyst. According to estimates, video streaming market value is expected to cross $100 billion. Walmart reportedly plans to price its video streaming service at $8 per month.
On Tuesday, Walmart announced a five-year strategic agreement with Microsoft to accelerate digital transformation in retail. Walmart said it plans to make shopping “faster” and easier for millions of customers around the world. Walmart’s partnership with Microsoft is a masterstroke against Amazon. Walmart will use Microsoft’s Azure Cloud platform to revamp its digital infrastructure. This would give Microsoft an edge over Amazon Web Services Cloud platform.
Walmart Inc (NYSE: WMT) fundamentals remains strong despite growth concerns. According to some estimates, earnings growth of about 9% is expected for Walmart this year on a year over year basis. In 2019, the growth is expected to slow down to 3.5%. But the slowdown is mainly because of the company’s massive spending on acquisitions and partnerships to go digital.
Walmart Inc (NYSE: WMT) ecommerce unit also has huge growth potential as currently the company’s ecommerce sales account for just 4% of the total top line. Walmart’s latest acquisition of Indian retail giant Flipkart was a huge win against Amazon. Walmart outbid Amazon by buying Flipkart for a whopping $15 billion. With this acquisition, Walmart strengthened its footprint in India, one of the biggest retail growth markets valued at $670 billion . Indian ecommerce market is growing faster than any other country in Asia. The country’s online retail market is expected to grow at a CAGR of 29.2% and cross $73 billion in 2022.
Earlier in July, Walmart launched its same-day grocery deliveries in New York City thorough Jet.com, an ecommerce company it acquired for $3.3 billion. Walmart will be rivaling Target and Amazon in the New York City area.
We believe that Walmart’s acquisitions and digital push will transform it into a growth machine. Therefore, Walmart Inc (NYSE: WMT) stock should be bought for profits in the future.
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Author does not have investment in stock discussed in this article.