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Morgan Stanley analysts told investors in a research note Tuesday that Walmart+ could be worth $45 billion.
The analysts, who have an Overweight rating and a $150 price target on Walmart (NYSE:WMT) shares, said that, on average, they believe the market is valuing retailer memberships at $2,494 per member, and applying this number to Morgan Stanley’s Walmart+ membership estimate implies a $45 billion value.
Morgan Stanley stated that as per AlphaWise data, Walmart+ membership stands at a record 18.5 million after increasing by two million in September.
“Per our latest AlphaWise Consumer Pulse Survey Wave 36 (conducted 9/30-10/3) Walmart+ has 18.6m members, or 14.4% US household penetration. Our latest 18.6m estimate is up 1.8m from our last published estimate from early September, and up 2.7m from our early August estimate,” wrote the analysts. “This positive inflection follows a period from August ’21 through July ’22 where membership was increasing at a much slower pace (~250k per month on average).”
The analysts stated that the membership total addressable market — which it defines as current members plus “very likely” to subscribe members discounted by 25% — was 27 million, “also a positive inflection (+3m vs. prior survey) and a new record.”
The analysts also wrote that the most significant addition to the service has been the most recent one — the inclusion of the Paramount Plus streaming service.
“Walmart has cited its own research suggesting a media/streaming offering was among the most requested features; it was also a hole in the offering relative to Amazon Prime,” commented the analysts.
