Walmart’s Flipkart is targeting a 4th-quarter IPO that could value it at $35 billion, new report says

FILE PHOTO: The logo of India's e-commerce firm Flipkart is seen in this illustration picture taken January 29, 2019. REUTERS/Danish Siddiqui/Illustration/File Photo

Walmart-owned Indian e-commerce company Flipkart is working towards an initial public offering as soon as the fourth quarter of this year, according to a report from Bloomberg.

Flipkart will be aiming for a valuation of at least $35 billion, according to Bloomberg, citing people familiar with the matter.

If achieved, that would mean Walmart more than doubled its investment in Flipkart. In 2018, the US retail giant purchased a 77% stake in Flipkart for $16 billion. Shares of Walmart rose 1.1% after the Bloomberg report Tuesday morning but have since pared back gains.

Flipkart will be one of the latest e-commerce-focused IPOs of 2021 as investors bet on the continued dominance of online shopping in a post-pandemic world. South Korean e-commerce giant Coupang Inc. went public in March in the largest IPO of the first quarter, raising $4.6 billion at a $63 billion market capitalization, according to data from Renaissance Capital.

The first quarter of 2021 was the busiest quarter for IPOs in the US in over 20 years, with 102 companies going public. But newly public companies have underperformed the market recently, and a number of companies with high-profile IPOs have lowered their own expectations, like Compass, which slashed its IPO price range ahead of its debut last week. It’s a sign that investors may be questioning whether the IPO market has overheated in the last year.

In September, Reuters reported that Flipkart was preparing for an IPO, aiming for a valuation in the $45-50 billion range.

Walmart has set up an internal IPO team for Flipkart and is aiming to go public in the US. The e-commerce company explored going public via a SPAC but that is no longer under consideration, the people said.

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Walmart sinks 6% as 4th-quarter earnings and full-year profit guidance miss expectations

Walmart
  • Walmart fell as much as 6.2% on Thursday after fourth-quarter earnings missed Wall Street estimates.
  • The retail giant’s forward guidance also rankled investors. Walmart expects profits to dip slightly and sales growth to slow.
  • CEO Doug McMillon announced the company would lift the average wage for its associates to $15 an hour.
  • Watch Walmart trade live here.

Walmart tumbled as much as 6.2% on Thursday after the retail giant’s fourth-quarter earnings landed below Wall Street forecasts.

While the company’s revenue through the period came in just above expectations, earnings disappointed. Losses from Walmart’s UK and Japanese operations drove the bulk of the shortfall and plunged the company into an unadjusted quarterly deficit. Even excluding those operations, adjusted earnings still missed expectations.

The retailer also warned revenue growth will slow through the next fiscal year. Profits are also expected to decline slightly, though divestitures should lead earnings to be flat or up slightly, according to the quarterly report.

Here are the key numbers:

Revenue: $152.1 billion, versus the $148.4 billion estimate

Adjusted earnings per share: $1.39, versus the $1.50 estimate

Same-store sale growth (excluding gas): 8.9%, versus the 6.1% estimate

Investors also balked at slowed growth from Walmart’s e-commerce arm. The increasingly important division saw revenue climb 69% over the quarter, its smallest increase since the pandemic hit the US in spring 2020. Widespread vaccination and falling case counts threaten to weaken online retail even further.

Walmart CEO Doug McMillon announced the company will raise the average wage for its hourly employees above $15 an hour. About 425,000 frontline associate workers will receive raises, according to the report. The investment follows raises for 165,000 associates in the fall.

“This is a time to be even more aggressive because of the opportunity we see in front of us,” McMillon said. “We have momentum with customers, and our financial position is strong.”

Walmart closed at $147.20 on Wednesday, up about 2% year-to-date. The company has 37 “buy” ratings, three “hold” ratings, and one “sell” rating from analysts.

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