How Walmart's Grand Metaverse Plan Could Boost Its Stock

Lately, the metaverse -- an immersive, digital world facilitated by virtual reality equipment -- has been top of mind for people who follow tech trends. But some seemingly unlikely players are also getting involved in what could be the future of the internet.

In this clip from "The Virtual Opportunities Show" on Motley Fool Live, recorded on June 7, Motley Fool contributors Rachel Warren and Demitri Kalogeropoulos discuss Walmart's (WMT 0.57%) quiet entry into the metaverse and cryptocurrency, and why it might be worth keeping an eye on.

Rachel Warren: For anyone that is maybe not following the stock or was thinking Walmart, the metaverse, what does this mean? Back in January, Walmart filed a series of trademarks. I believe it actually might have been at the very end of 2021, was announced in January. But they filed several trademarks, very much indicating that they want to make and sell virtual goods, and it was a very quiet way of entering the metaverse. But its filings indicated that they want to create their own cryptocurrency potentially, collection of NFTs. We'll see what that looks like. There's obviously been a lot of volatility in that side of the market.

But I think they're looking at this as a very long-term view. But one of the key points from the filing was that they were saying "online retail store services featuring virtual merchandise, virtual electronics, appliances, indoor and outdoor furniture, video games." Essentially, this idea of potentially at one point in the future, selling pretty much anything that they sell in store in a virtual environment. That's been what we know so far about Walmart and what they're doing as they're looking at the metaverse. There hasn't been a ton of information that's come out since then, but that is very much something they seem to be intent on doing.

They went ahead and they reported their earnings recently. This was for the company's first quarter of their fiscal 2023. They do report a little bit differently than a lot of other companies. This is not a company that has been known for super high levels of growth, quarter to quarter, or even year over year. Again, big-box retailer like Walmart, they've been around forever, they have a ton of consumer loyalty, really diverse business, but this is much more a classic value-oriented stock, I think, which is not uncommon for the retail space.

Just to give a few quick highlights, they had pretty strong top-line growth. Walmart reported total revenue of about $142 billion, and that was up just about 2.4% year over year. Again, this is not a high-growth company, but that level of growth year over year is pretty standard for them. U.S. comp sales grew 3% year over year and 9% from the same quarter two years ago. Now, this is interesting that e-commerce is an area where Walmart saw a lot of surges in growth in the earlier days of the pandemic with so many people shopping online. In this most recent quarter, e-commerce growth was up just 1% year over year, or 38%, compared to the same quarter two years ago. International sales were down. Comp sales from Sam's Club were up year over year double digits, at 10%. It's a mixture of performance there.

I think this is an interesting company to follow. Stocks in general have been beaten down lately. Walmart stock is no exception. I'm not an investor in Walmart, but I do think that they offer a lot of stability for long-term investors looking for more of a stable choice for their portfolio. I'd be very interested to see what their intention is to get into the metaverse over the next few years if we find out more about that, perhaps later this year. Yeah, kind of just an interesting company to follow and watch. Again, not high growth, but I think there's a lot of potential there, and perhaps we're just seeing the very early stages of potential growth they could tap into, if they actually do explore this idea of selling virtual goods.

Demitri Kalogeropoulos: For sure. We had a rare move in Walmart stock. I don't know if it's unprecedented or not, but after that earnings report, but I don't think a company that big, I don't know, if it's ever moved 15% or something in one day. Well, I'm sure it has a couple of times.

Warren: It was a historic downturn. [laughs]

Kalogeropoulos: Yeah, and all they did, they basically upgraded their sales guidance and lowered their earnings estimate a little bit like Target did earlier. But in many ways that's not a big deal, investors are going to look past the short-term earnings downfall.