Could Walmart Be a Winning Metaverse Stock?

A series of trademark applications filed by retail giant Walmart (WMT 1.32%) have garnered attention from investors and fueled tremendous speculation about the company's own foray into the much-hyped metaverse.

In this segment of Backstage Pass, recorded on Jan. 19, Fool.com contributors Trevor Jennewine, Rachel Warren, and Danny Vena discuss a recent report by CNBC about Walmart's potential presence in the metaverse. They also share their thoughts on metaverse opportunities for other companies in the years ahead. 

Trevor Jennewine: I don't think this is particularly needle-moving for the company. That being said, the way that I've seen the metaverse talked about in the way that I envision it, which may be completely wrong, is that there are a bunch of different digital worlds that blend aspects of social media, gaming, entertainment, and the Internet in general. I've seen Mark Zuckerberg commenting that in the metaverse you'll be able to do basically anything you can do in the real world and then things you can't imagine. You can engage with friends, watch movies, travel, shop, learn, create, work.

With that in mind, I think that every business will eventually have a place in the metaverse. Just like if you rewind a few decades, it might have been something special to have a website. But now if you're a business that doesn't have a website, you're doing something wrong.

I think the metaverse is that evolution of the Internet. Maybe you'll be able to browse virtual marketplace that's powered by the Amazon or Etsy or new shops that are powered by Shopify inside the metaverse. I think every company will eventually have a place there, so I'm not that surprised to see Walmart going this way. I don't think it's needle-moving at the moment.

Rachel Warren: Interesting. What about you, Danny?

Danny Vena: I was surprised in that. I see Walmart as an old economy type of company. But that said, I mean, if you think about Walmart and you think about, well, first of all, let's talk about the metaverse. I mean, Morgan Stanley analyst, Brian Nowak is what his name was, and he's potentially pegged the metaverse at like an $8 trillion addressable market, trillion with a T if it's as big as people think it is.

Now, I certainly believe it has that potential. But think back not too many years ago, that's what people were saying about 3D printing as an example. There's potential there. That doesn't necessarily mean it's going to crystallize. Walmart might not sound like a likely player in cryptocurrency or NFT.

But then again, it also wasn't too many years ago that we would have mocked Walmart's e-commerce ambitions, and then it acquired Jet, and then that became the company's primary growth engine. Walmart definitely has the forward-thinking.

Even though it's an old economy company, I think they have the forward-thinking ideas. I think that they could find a way to meld cryptocurrency and NFTs into their business. Like Trevor said, I don't think it's going to be a needle mover.

But with regards to the metaverse, I think companies with the means, they better be willing to stake a claim now. Because if the metaverse is as big as we think, it's going to be the companies that are putting down stakes now. If you look at cryptocurrency and NFTs, we think, well, that's all very new. But there's already crypto millionaires out there. I think the metaverse is probably going to follow a similar trajectory.

I think there's a lot of lucrative opportunities out there. If you think about the potential applications, they're already doing a 360-degree films for real estate. Combine that with virtual and augmented reality and you do real-time walkthroughs of a houses you're thinking about buying, home furnishings, car shopping, e-commerce, as well as the things we've already talked about, gaming and social media, the obvious ones. I don't think the question is so much as who's next, but who's going to be left behind if they don't get on it now.

Rachel Warren: Yeah. I think those are good points. This idea that if Walmart doesn't get in on the metaverse and companies like Walmart that they'll miss out and forfeit their opportunity. It's interesting. I haven't really thought about it in the sense of kind of like companies once scoffed at the idea of having a website. Now this is this essential part of their business operations.

I haven't really thought of the metaverse being a cog in the business wheel to that sense, and it may very well be, I don't know. I was very surprised by this. I think it'll be very interesting to see how this plays out for Walmart. I don't see it as being something that in the immediate future is really this huge mover for shareholders.

But if anything, as we see growth within the metaverse and the fact that Walmart is really an early mover compared to other companies within the industry in which it operates, it could certainly be a winner within that space. I think it's just so fascinating to me when I'm watching all of these companies that have entered the metaverse.

For example, the end of 2021, Nike announced that it was acquiring a virtual shoe company that makes NFTs. I can get this idea of maybe you want to go on a virtual adventure or you want to visit somewhere in the metaverse that maybe you can't get too or you don't have the time to visit in real life. I haven't really been able to wrap my head around this idea of buying virtual shoes or virtual plots of land. I can even get my head around virtual artwork.

Okay, I think this is a cool thing. Again, this is just my personal take. But this idea of buying virtual products, like a pair of shoes instead of a real pair of shoes, I don't quite get the idea behind that. I know obviously there's an idea that it appreciates overtime. For example, there was this crazy story a few weeks ago that people paid for three plots of digital land next to the Snoop Dogg mansion in the metaverse.

You have people that are paying millions of dollars for premium real estate that doesn't exist in the real world, it only exists in the virtual world. I just think we're in a very different day and age that we haven't seen before in terms of how investors look at opportunities and the kinds of opportunities they're looking for.

This is one I'll definitely watch. I find it strange but interesting. Now that a big store retailer like Walmart is entering this space, I'm like, could Target join the metaverse next? Could Costco join the metaverse? It sounds farfetched, but honestly I feel it's going to be a lot of surprises as we continue to roll out.