When the news broke that Walmart was set to acquire Vizio in a $2.3 billion deal, investors could almost hear the clinking of champagne glasses in celebration. The stock, which already received a boost after rumors of the acquisition surfaced, soared by 15.2% as the news was officially confirmed later in the week, according to data from S&P Global Market Intelligence.
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Walmart’s Strategic Move
Walmart’s purchase of Vizio, known for being the top-selling TV brand at Walmart and the second-largest seller of flat-screen TVs in the U.S., signifies a significant step in the retail giant’s evolving strategy. This acquisition will serve as a gateway for Walmart into innovative television and in-home entertainment and media experiences, leveraging Vizio’s SmartCast Operating System (OS) to enhance customer interaction and entertainment options.
It’s not just about TVs. Walmart sees Vizio as a vehicle to drive the growth of its advertising business, Walmart Connect. The acquisition brings over 500 direct advertiser relationships and more than 18 million SmartCast accounts, hinting at the lucrative potential Walmart views in Vizio’s advertising solutions and OS.
An Unanticipated Shake-Up
Walmart’s move stirred the pot in the industry. As the retail behemoth sets its sights on expanding its advertising platform, the significant fall in shares of Roku, the leading connected TV advertising platform, following the news, underscores the impact the Walmart-Vizio deal could have on the market.
Moreover, this acquisition represents Walmart’s attempt to amend past oversights, as it aims to capitalize on the streaming revolution after missing out on leveraging its ownership of Vudu for a decade. This time, Walmart is determined not to miss the bus as it steps up its game in the realm of advertising and in-home entertainment.
Should investors flock to Vizio stock? Not so fast. It’s crucial to carefully weigh the opportunities in the wake of this acquirement. Perhaps, consulting the Motley Fool Stock Advisor, which tracks the crème de la crème of the stock market, might yield valuable insights before making any verdicts.
Jeremy Bowman has positions in Roku. The Motley Fool has positions in and recommends Roku and Walmart. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
