Morgan Stanley estimates that Walmart+(WMT stock), the membership plan offered by the retail behemoth, might be worth around $45 billion; however, investors have not yet included this information into the company’s price.
Walmart (WMT Stock) New Service
In 2020, Walmart (NYSE:WMT) introduced a new service known as Walmart+ to compete with other subscription services, such as those offered by Amazon (AMZN). By just $12.95 a month, members get access to free shipping and delivery, savings on gasoline, unique prizes, and exclusive deal access. As with August, users of Walmart+ also get access to a Paramount+ streaming service at no additional cost.
Since the beginning of the service, Walmart has kept the total number of subscribers a closely guarded secret; this policy may be contributing to the stock’s decline.
According to Simeon Gutman, an analyst at Morgan Stanley, “We have seen a range of estimates from various sources, and investor response shows there isn’t a clear agreement.” “For this reason, we’re not convinced the stock is getting full credit for Walmart’s success in building membership, which is important for the ongoing financial stream it generates.”
Gutman believed the total might be over 18.5 million subscribers or 14.4% of U.S. homes. According to the analyst’s calculations, assuming retail memberships generate around $2,500 per member, Walmart’s program might be valued at approximately $45 billion, which would add $17 to Walmart’s stock price. In addition, the membership fee alone might be on pace to generate nearly $2 billion in yearly income.
There are significant drawbacks to the findings, according to Gutman. It is not quite apparent whether or not a Walmart+ member will produce the same amount of money as a member of Costco Wholesale (COST) or Amazon Prime. However, Gutman thinks the program is strong enough that the stock might rise if Walmart announces the number of subscribers.
He reaffirmed his Overweight rating and his $150 price objective for the company. On Tuesday, Walmart’s stock rose by 1.5% to $131.25 a share. This year, the WMT stock price has decreased by 9.3%.
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Author Valerie Remorosa 
