What The TikTok Deal Means For Walmart

What The TikTok Deal Means For Walmart

Walmart Inc’s WMT proposed investment for a 7.5% stake in TikTok is still awaiting approval from the U.S. and China. Oracle Corporation ORCL is expected to acquire a 12.5% stake in the social media app.

While Walmart could help monetize TikTok Global, the investment represents several positives for the retail giant, according to BofA Securities.

The Walmart Analyst: Robert Ohmes maintained a Buy rating for Walmart, with a price target of $175.

The Walmart Thesis: Walmart has indicated that TikTok, with around 100 million monthly active users in the U.S., has a significant potential relationship.

Its integration of e-commerce and advertising capabilities could provide the retailer “key functionalities in terms of reaching and serving its omnichannel customers and driving growth in its 3P marketplace and advertising businesses,” Ohmes said in the note.

He mentioned four key positives for Walmart:

  • It represents a global monetization opportunity.
  • The company has the potential to “leverage Walmart Pay in the U.S., PhonePe in India & Cashi digital payment app in Mexico in its efforts to help monetize TikTok."
  • Walmart.com could help broaden the use of the TikTok platform and help increase digital ad revenues, particularly if TikTok leverages WMT’s measurement-as-service advertising tool that can report if people buy a product after seeing an ad."
  • The company would bring substantial fulfillment capabilities to TikTok.

WMT Price Action: Shares of Walmart traded around $138.40 at the time of publication Tuesday.

 

© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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