Retail giant Walmart announced a partnership with investment firm Ribbit Capital to create a new fintech startup. Shares were up 1.3% in Tuesday’s pre-market trading.
Walmart’s (WMT) fintech startup will develop tech-driven financial solutions tailored to the needs of its customers and employees. The company believes that the fintech collaboration will bring together its retail expertise as well as scale and Ribbit’s fintech know-how. Ribbit has backed platforms like Robinhood, Affirm and Credit Karma.
The fintech company, which is not yet named, will be majority-owned by Walmart. The retailer expects the venture to expand through acquisitions and partnerships with leading fintech companies. Walmart already offers customers financial services like Walmart Credit Card, Walmart Money Card and installment financing.
Meanwhile, the fintech company’s board will include John Furner, President and CEO of Walmart US, Brett Biggs, Walmart’s CFO and Meyer Malka, managing partner of Ribbit Capital. The company also plans to appoint independent industry experts to the board. (See WMT stock analysis on TipRanks)
On Dec. 21, RBC Capital analyst Scot Ciccarelli upgraded Walmart to Buy from Hold and raised the price target to $170 from $153. In a note to investors, the analyst stated, “Given its size, rapidly growing e-comm platform and consumer value proposition, we believe WMT is one of the best positioned stocks in our universe to handle the myriad of possible outcomes in 2021.”
“Improved/more consistent US EBIT performance and the potential value unlock from its international operations will likely generate additional multiple expansion,” Ciccarelli added.
Overall, the Street has a Strong Buy analyst consensus for Walmart that breaks down into 17 Buys versus 4 Holds. Shares have advanced about 27% over the past 52 weeks and the average price target of $165.56 suggests further upside potential of 12.4% from current levels.