Walmart Invests in DroneUp; Eyes Last-Mile Delivery Solution


Walmart (WMT) is investing in drone service provider DroneUp as it looks to get customers the items they want within the shortest time. The investment builds on a strategic partnership that began last year, resulting in the two companies carrying out drone delivery trials.

The investment follows more than 100 drone delivery trials from Walmart stores. The trials have successfully demonstrated that the retailer could offer customers delivery within minutes rather than hours with current systems.

Walmart’s investment in DroneUp seeks to accelerate the development of a scalable last-mile delivery solution. DroneUp is a government-certified service provider. It currently operates in 11 states across the U.S. The retailer intends to kick start its drone delivery service at a store in Arkansas. (See Walmart stock chart on TipRanks).

“Conducting drone deliveries at scale is within reach. DroneUp’s expertise, combined with our retail footprint and proven history of logistics innovation, puts us right where we want to be for that day. Because when it comes to the future of drone delivery, we know the sky’s the limit,” said Walmart in a press release.

In addition to investing in drone delivery services, Walmart has also invested in Cruise as it looks to enhance its delivery services through autonomous electric cars.

Morgan Stanley analyst Simeon Gutman has reiterated a Buy rating on the stock with a $160 price target, implying 16.2% upside potential to current levels.

The analyst is impressed by a recent Consumer Pulse Survey, which indicates Walmart+ membership is nearing the 10 million member level. The increase is attributed to the retailer prioritizing the membership experience by building fulfillment capacity.

Consensus among analysts is a Strong Buy based on 15 Buys and 4 Holds. The Walmart average analyst price target of $167.24 implies 21.4% upside potential to current levels.

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