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Walmart+ membership plan valued at $45 billion by Morgan Stanley

A new note from Morgan Stanley suggested that Walmart+ could be worth $45 billion, sending the stock higher in Tuesday's trading session.

Video Transcript

- Some good news, though, from my plate, which is Walmart. Always low prices. But the price of the stock is up on a note from Morgan Stanley suggesting Walmart Plus could be worth $45 billion. The retail giant launched its membership program in 2020 in a bid to compete with Amazon Prime. Costs are similar. $12.95 per month. That includes free shipping, delivery, and savings on fuel, among other benefits.

Members also have access to Paramount Plus streaming content, a new addition. Morgan Stanley's Simeon Gutman says, quote, "we're not sure the stock is getting full credit for Walmart's progress in growing membership and for the recurring income stream it generates." Walmart does not disclose the actual numbers of members.

But Gutman estimates the figure could reach 18 and 1/2 million, or 14-plus percent of US households. And that represents the $45 billion figure we mentioned there. That adds $17 billion to the current stock price. Shares up about 3% today. Down, though, 8% year to date. Rachelle, this is a big note out on the future of Walmart Plus. We always talk about Amazon Prime, today being their second Prime Day, which is kind of not as well received as they might have hoped. A lot of upside here for Walmart.

- I mean, you'd think so. Clearly, it's been working well for Amazon. And that's the model to go by, even though, obviously, Walmart was the more established brand. I do think this is a very smart play from Walmart. I do have to wonder, though, how thin consumers can actually be stretched. And will they be willing to have both their Amazon Prime accounts plus then having this with Walmart? Or will they perhaps pick and choose.

And then when you add on bundling on top of that when it comes to them both sort of teaming up with streaming services, it's a lot. You might have to pick sides if you just don't have the bandwidth to be able to afford both Amazon and Walmart's prices right now, Seana.

- Yeah. I think the bigger question also going forward is what this could potentially mean for Amazon Prime membership. We know that Amazon Prime membership has up until this point remained very sticky. If there is a competing offer out there from Walmart that continues to gain a popularity, obviously, this could be a huge challenge here for Amazon going forward.

The one thing that does differentiate the two offerings here is, clearly, that fuel savings that, Dave, you mentioned there in terms of Walmart. So when we're seeing gas prices so high and now likely to creep back above $4 a gallon when we're looking at the nationwide average, I think that would be enough to entice some people to Walmart instead of what they're getting from Amazon Prime.

- Yeah. You put enough miles on your car, it's pretty easy to make up 13 bucks in one month.