Here’s Why the Flipkart IPO Is a Brilliant Move for Walmart

heres why the flipkart ipo is a brilliant move for walmart

Sumary of Here’s Why the Flipkart IPO Is a Brilliant Move for Walmart:

  • According to Bloomberg, the leading Indian e-commerce company, which is 77% owned by Walmart (NYSE:WMT), is seeking a valuation that could top $35 billion..
  • Walmart had been considering taking the company public through a special purpose acquisition company (SPAC) but is opting for the more traditional IPO route..
  • It’s not unusual these days for debuts to double on their opening day, and foreign-based companies and e-commerce stocks have also been big winners..
  • Coupang, for example, a South Korean e-commerce company, jumped 41% in its IPO, and Ozon, a Russian e-commerce operator, saw a 34% pop on its first trading day..
  • If that pattern were to hold for Flipkart, the Indian e-commerce company could be worth more than $50 billion once it’s publicly traded, unlocking significant value for Walmart..
  • It’s not just new issues that have been flying higher either as e-commerce stocks, in general, have skyrocketed during the pandemic..
  • As you can see, e-commerce stocks are up by multiples since early in the pandemic, and investors have reassessed their valuations of the sector as growth in online retail has accelerated by several years because of the pandemic, and that includes in India..
  • A new Walmart Walmart is eager to reinvent its image from a stodgy brick-and-mortar retailer to a diversified company squarely focused on the future..
  • By doing so, Walmart will be tying its own valuation to that of Flipkart, which is likely to do well as a publicly traded stock given the massive opportunity in India and investors’ own appetite for e-commerce stocks and IPO stocks..
  • The Flipkart IPO could even have a halo effect on the rest of Walmart’s businesses, causing investors to value the company more like a growth stock, which will lead to multiple expansions..
  • PhonePe, the digital payments app that now has more than 100 million monthly active users and is fast becoming a “super app”.
  • It looks to have a bright future, given the opportunity in digital payments and the $16 billion valuation of rival Paytm, the Indian payments app backed by Softbank and Alibaba, in its last funding round in 2019…

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