Morningstar cited long-term advertising growth potential for Walmart after the Vibe.co deal.
- Morningstar said Vibe.co will strengthen Walmart Connect by combining the platform with its shopper data, measurement tools and VIZIO assets.
- Analyst Brett Husslein said the deal creates a more integrated advertising ecosystem and supports long-term advertising growth.
- Husslein maintained that Walmart shares remain overvalued.
Walmart Inc. (WMT) stock gained premarket on Friday as Morningstar said the retailer's planned acquisition of connected TV advertising platform Vibe.co would strengthen its fast-growing advertising business and support its long-term growth strategy.
WMT Building An Integrated Advertising Platform
Announcing the acquisition on Tuesday, Walmart said the deal is intended to strengthen Walmart Connect's full-funnel advertising offerings by combining Vibe.co's campaign management platform with Walmart's first-party shopper data, closed-loop measurement tools and media assets, including VIZIO.
According to Morningstar analyst Brett Husslein, the acquisition gives a lift to Walmart's effort to create a more integrated advertising ecosystem, similar to platforms developed by major digital advertising companies.
By combining shopper data from its retail operations, streaming inventory through Vizio and Vibe.co's self-service advertising platform, he said Walmart could improve campaign management while retaining more advertising data and revenue internally.
Morningstar believes the deal opens the door to a significant new customer base by making Walmart's advertising platform more accessible to small and midsize businesses.
The analyst noted that these advertisers account for roughly half of the estimated $1 trillion global advertising market, creating a meaningful long-term growth opportunity for Walmart's Global Advertising business.
However, Morningstar maintained that Walmart shares remain expensive at current levels, adding that investors are already pricing in greater advertising-driven margin expansion than the firm considers achievable.
Walmart stock traded over 1% higher in Friday’s premarket.
WMT Strengthening Infrastructure
Alongside its advertising expansion, Walmart signed its first long-term nuclear energy purchase agreement with Constellation Energy. Under the 15-year arrangement, the retailer will receive approximately 176 megawatts of carbon-free electricity from the Dresden Clean Energy Center.
Walmart said the power will help supply its next generation of automated distribution facilities, providing greater energy cost visibility while reducing exposure to electricity market volatility.
WMT Retail Traders View
On Stocktwits, retail sentiment around the stock turned to ‘bearish’ from ‘extremely bearish’ territory the previous day.
A user said, “$WMT will outperform $AMZN for rest of year!”
Another user said, “Wholesaling and Retailing nuclear power is the first, novel and hopefully monopoly! This is big.”
WMT stock has gained nearly 4% year-to-date.
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