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Why Walmart Stock Jumped Today

By Joe Tenebruso – Jul 7, 2020 at 6:07PM

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The retail giant will reportedly offer a new Prime-like membership service later this month.

What happened

Shares of Walmart (WMT -0.64%) climbed 6.8% on Tuesday after news broke that the retail titan is gearing up to take on Prime from (AMZN -1.90%).

So what

Walmart will launch a new subscription service later in July, according to tech site Recode. The service will reportedly include same-day delivery for groceries and other goods, fuel discounts, and other special deals. It will be called Walmart+ and cost $98 per year. 

A digital shopping cart.

Walmart is reportedly about to ramp up its e-commerce offerings. Image source: Getty Images.

Walmart no doubt hopes that the new Prime-like service will help it close the gap with its e-commerce arch-nemesis, Amazon.

Now what

Amazon Prime has more than 150 million members worldwide. Prime members pay $12.99 monthly or $119 annually in exchange for a host of benefits, including free shipping, music and video streaming, and an array of discounts. Prime is widely considered to be a key part of Amazon's e-commerce success. It incentivizes members to shop on Amazon's sites as much as possible, in order to maximize the value of their Prime investment.

Walmart would like to build a Prime alternative that can help to fuel its own e-commerce growth. But whether consumers will pay for both services or drop Prime in favor of Walmart+ remains to be seen.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.

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