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 Corpoation 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 omni-channel customers and driving growth in its 3P marketplace and advertising businesses,” Ohmes said in the note.

See Also: ByteDance Denies Most Of Trump's Claims On TikTok Deal With Oracle, Walmart

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.

Posted In: BofA SecuritiesRobert OhmesTikTokAnalyst ColorReiterationAnalyst Ratings