Walmart (NYSE:WMT) just made its boldest move yet to turn shopping data into ad dollars. On August 4, the retailer completed its acquisition of Vibe.co, a self-service streaming TV advertising platform founded in 2021. The deal folds into Walmart Connect, the company’s US commerce media arm, giving advertisers of any size an easier way to plan, buy, and measure streaming TV campaigns tied directly to shopping behavior. It is a logical next step for a company whose core business has been strong all year, even as its stock has struggled to reflect that strength.
Bull Case: A Retail Giant Quietly Building New Muscle
The timing lines up with real momentum elsewhere in the business. Walmart’s most recent quarter showed revenue up 7% to 7.3% year-over-year, with comparable sales climbing 4% and e-commerce surging 26%, while adjusted operating income rose 5% and adjusted EPS increased 8%. Advertising has become one of the fastest-growing pieces of that story, with ad revenue up 37% in the same period, a pace that makes the Vibe.co acquisition look less like a side bet and more like reinforcement of an engine already firing. Add in a business model built to hold up in tougher economies, since shoppers tend to lean harder on low prices and discounts when budgets tighten, and Walmart also carries the distinction of a Dividend King, having raised its payout for more than 50 consecutive years while growing that dividend by about 6% annually over the past five years.
Bear Case: The Multiple Investors Can’t Quite Swallow
None of that has translated into share price gains this year. Walmart hit an all-time high of $135.16 on May 18, then fell roughly 17% to a low of $108 by July 23, leaving the stock up only about 1% year-to-date, well behind double-digit gains at Target and Costco. Valuation is the likely culprit. The forward price-to-earnings ratio touched a five-year high of 48 on April 30 before settling near 38 to 39, still above the stock’s 10-year average of roughly 32 and its own five-year average of 27. Price-to-sales tells a similar story at 1.24, versus a five-year average of 0.83.
Guidance has not helped the case either. Full-year targets were left unchanged after the last report but came in below analyst estimates, and Walmart flagged higher fuel costs along with pressure on lower-income shoppers heading into its second quarter. Those pressures have not obviously eased, which tempers hopes that the August 20 earnings report will bring the guidance boost some investors are counting on.
What The Smart Money Is Signaling
Hedge fund ownership slipped from 114 funds to 99 in the most recent quarter, a pullback that suggests some institutional trimming rather than fresh conviction. Short interest, meanwhile, sits at just 1.68% of float, which points to very little organized bearish positioning against the stock. A forward P/E of 38.61, as of August 11, shows the market is still pricing in meaningful growth despite the pullback in shares.
Where This Leaves Investors
Walmart heads into its August 20 earnings report with a widening advertising business, a growing e-commerce engine, and a fresh streaming ad platform in Vibe.co, all while its stock sits well off its highs. For the bulls, continued advertising growth and any sign of easing consumer pressure would help justify the current multiple.
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