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Shares of Vizio Holding Corp. rocketed higher on Tuesday on a report that Walmart Inc. was in talks to buy the smart-TV maker for at least $2 billion in an effort to deck out its stores with more screens where it can display ads — an increasingly important part of the big-box retailer’s business.
The news was reported by the Wall Street Journal. Walmart declined to comment.
Vizio’s
VZIO,
stock jumped 24.7% to close out regular trading on Tuesday, its largest one-day percentage increase since Nov. 10, 2023, when it jumped 26.5%, according to Dow Jones Market Data. Shares began trading in 2021.
Shares of Walmart
WMT,
were down around 0.7%.
The Journal noted that the deal could still fall through, since the talks were ongoing. But if it were to go through, it would highlight the retail industry’s increased focus on so-called “retail media” — or the business of having outside brands pay a retailer to advertise, either on digital screens in stores or on the retailer’s website or apps.
Walmart and Amazon.com Inc.
AMZN,
— along with companies like Uber Technologies Inc.
UBER,
— have pushed further into that business. Analysts say those digital ads bring higher margins, potentially helping companies with the digital ad space smooth out ebbs and flows in business elsewhere.
Amazon, in its fourth quarter alone, reported ad services revenue of $14.65 billion, a 27% year-over-year gain. Walmart said that its global advertising business grew around 20% during its third quarter.
The Journal said that Walmart has generally been Vizio’s biggest customer. But in Vizio’s annual report last year, the company noted that Walmart sells its own brand of TVs, called Onn, and said Walmart “has chosen and may continue to choose to promote their own devices over ours or could ultimately cease selling or promoting our devices entirely.”
Gil Sadeh, chief growth officer at the marketing company Skai, said any deal, if it happened, could give Walmart more than TVs.
“The purchase is not about obtaining hardware; it’s about gaining access to Vizio’s operating system (OS), which holds valuable viewership data,” he said over email. “This data is essential for targeting and measuring advertising effectiveness, particularly in a cookieless world where traditional measurement methods are evolving.”
However, Piper Sandler analyst Matt Farrell said in a research note that any deal could translate into bad news for the TV streaming platform Roku Inc.
ROKU,
He said Walmart accounts for a big chunk of Roku’s device sales, and the two have an ad-related partnership.
“Wal-Mart could allocate more resources to Vizio if it were owned in-house,” he said. “However, it is worth noting that Roku (~76M active accounts in Q3) has significantly more scale than Vizio (~18M active accounts in Q3), so we don’t believe Wal-Mart could move away from Roku entirely.”
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