2 Corporate Titans Resisting Definition: Will Tomorrow's Mega-Companies "Do Everything?"

Wal-Mart and Amazon.com used to have straightforward business models -- not anymore. Supervalu shares retreat after Wednesday's surge

Apr 24, 2014 at 6:34PM

Getting mixed signals from today's economic data, stocks wavered on Thursday, uncertain of which way to go. In fact, the Dow Jones Industrial Average (DJINDICES:^DJI) never entirely made up its mind, ending exactly sideways: It began and ended the day at 16,501. Durable goods orders improved markedly last month, topping expectations and painting a picture of a strengthening manufacturing sector. Jobless claims spiked without warning last week. It's no wonder Wall Street was confused. 

As a handful of corporate giants enter into new lines of business with the intent to stimulate growth, the way we classify these diversified conglomerates is getting muddied, as well. Dow mainstay Wal-Mart (NYSE:WMT), for instance, which added 0.4% on Thursday, recently made waves by announcing it would buy and sell used video games, a revelation that sent Gamestop investors briefly scrambling for the exits. Then, last week, it caused Western Union shares to plummet, as Wal-Mart unveiled plans to deploy its own money-transfer service within its U.S. stores.

It wasn't too long ago that most consumers thought of Wal-Mart as simply a big-box retailer. But as competitors like grocery chain Supervalu (NYSE:SVU) can tell you, Wal-Mart has morphed into the world's largest grocer over the years, as well. Fifty-six percent of Wal-Mart's net sales in the U.S. last year were from its grocery segment. Supervalu shares tumbled 6.6% today, as cautious investors took some chips off the table after the stock jumped 11.5% on Wednesday. The company managed to eke out a profit last quarter, which delighted shareholders. That said, if Wal-Mart is able to lure customers away from Supervalu with its long list of additional in-house services, those profits won't last long. 


Amazon Fire TV, another option for video streaming. Source: Amazon.com

Amazon.com (NASDAQ:AMZN), Wal-Mart's sworn enemy and biggest direct threat, is also a jack of all trades. Just yesterday, the company announced a shocking, unprecedented deal with HBO to license some of its older content and add it to the video library of Amazon Prime members. It's even begun producing its own exclusive shows in an effort to go head-to-head with Netflix. Amazon stock surged 3.9% today in anticipation of its quarterly results after the bell. While margins are still slim, sales beat expectations, growing at a 23% pace last quarter, a remarkable feat for such a massive company. Amazon also has plans to get into the grocery market.

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John Divine has no position in any stocks mentioned. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

 The Motley Fool recommends Amazon.com, Netflix, and Western Union. The Motley Fool owns shares of Amazon.com, GameStop, and Netflix. 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.

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