Should Walmart's Purchase of Vizio Worry Roku Stock Investors?
Retail giant Walmart (NYSE: WMT) just announced it will purchase smart TV maker Vizio (NYSE: VZIO) for $2.3 billion. Admittedly, the deal may spook investors in Roku (NASDAQ: ROKU), which leads the smart TV ads and TV operating system markets, according to market research firm Pixalate. Indeed, Roku stock fell nearly 7% on the day following this announcement.
Vizio should benefit from Walmart's vast resources, allowing it to improve its television and ad platforms. However, Roku has managed to compete against other megacap companies successfully. Does its past success help Roku, or will the synergies of the Walmart-Vizio merger erode its competitive advantage?
Walmart continues to succeed in advertising. Its global ad business grew 28% yearly. Keep in mind that Walmart achieved these ad-sales gains across a deep downturn in the digital advertising market, sparked by the inflation crisis in 2021 and 2022. This success bodes well for the company, as it seeks to compete with Amazon and Google parent Alphabet, and with the Vizio purchase, that competition will extend to the TV market.
Source Fool.com
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