Walmart Stock Jumped 7% On New Offering; Is It Too Late To Buy WMT Stock Now?
The battle between Walmart (WMT Stock Report) and Amazon (AMZN Stock Report) is ramping up this month as Walmart prepares to launch a new membership that rivals Amazon Prime. Shortly after the news went out, shares of Walmart climbed 6.8% on Tuesday. This makes Walmart the top gainer among constituents of the Dow Jones on Tuesday.
According to the tech site Recode, Walmart will launch a new subscription service later in July. The new highly anticipated subscription program is called Walmart +. The retail giant is charging consumers $98 a year for same-day delivery of groceries and general merchandise, fuel discounts, and other special deals. No doubt, Walmart hopes the new premium service will help it close the gap with its arch-nemesis, Amazon.
The upcoming launch of Walmart + couldn’t arrive at a better time when e-commerce couldn’t be more practical for shoppers wary of the coronavirus. The proposed benefit of the Amazon Prime-like service is giving subscribers priority treatment when it comes to grocery delivery slots. This would be highly attractive for consumers especially during the pandemic. Apart from fighting to dominate the e-commerce space, if not a bigger stake in that area. Right now, consumer loyalty to Amazon Prime is second to none when it comes to online shopping, at least in North America.
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Could We See Impressive Gains In WMT Stock In The Short Term?
Bullish fundamentals haven’t changed since we enter the second half of 2020. There’s a great chance many brick and mortar retail chains are likely to go bankrupt or be bought over by larger competitors in the coming months. The notion that cash is king couldn’t be more true at this stage. Without a significant amount of cash on a company’s balance sheet, we can see companies, both big and small, run into major trouble. They may even be forced into bankruptcy especially during this trying time.
With Walmart’s strong balance sheet and the major uptick in their online sales recorded during the first quarter of 2020, we could expect the trend to continue. Walmart could gain sizable market share as a result of those retail closings. This could further boost earnings in 2021 and beyond. If there is a lesson from this pandemic, it is that the big companies are getting bigger. With the new service, if it turns out to be as successful as hoped, this would be huge for WMT stock investors. For this reason, WMT stock remains the best retail stock to watch in the second half of 2020.
Bottom Line For WMT Stock
Walmart is planning to build the Amazon Prime alternative to help fuel its own e-commerce growth. But the big question here is whether consumers will ditch Amazon Prime in favor of Walmart + remains to be seen. Signing up for both Amazon Prime and Walmart + together doesn’t seem very economical at this time. But let’s assume Walmart really manages to convert some of Amazon Prime’s members to Walmart +. The question is, can Walmart maintain a lasting and loyal customer base on this new service?