Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Moneygram International Inc (NASDAQ:MGI) plunged 16% today after retail gorilla Wal-Mart Stores, (NYSE:WMT) announced a partnership with Euronet Worldwide, (NASDAQ:EEFT) to launch a competing wire-transfer service, Walmart-2-Walmart.
So what: Wal-Mart said that Walmart-2-Walmart will charge fees -- $4.50 for transfers up to $50 and $9.50 for up to $900 -- that are roughly 50% lower than similar offers in the market, raising serious concerns over the future profitability of several money-transfer companies. And while shares of industry leader Western Union (NYSE:WU) are also down today, the news is hitting MoneyGram particularly hard, as Wal-Mart currently accounts for about 30% of its total fee and investment revenue.
Now what: Walmart plans to make Walmart-2-Walmart available on April 24. "Walmart-2-Walmart brings new competition and transparent, everyday low prices to a market that has become complicated and costly for our customers," said Daniel Eckert, senior vice president of services for Walmart U.S. "We're doing what we do best -- launching a new service that challenges the status quo and drives down prices for our customers." So while it might be tempting to play Moneygram shares for a short-term rebound, Wal-Mart's entry into the space doesn't exactly lend itself to juicy long-term gains.
Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Western Union. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.