Likely Vizio (VZIO) Acquisition: Implications for Stocks and Advertising

Vizio Holding Corp. (NYSE: VZIO) witnessed a substantial surge of 24.68% in its stock value, concluding the previous trading session at $9.75. This notable uptick in VIZIO stock price was spurred by the emergence of a takeover bid announced recently.

The Wall Street Journal revealed on Tuesday that Walmart is in the process of negotiating a $2 billion+ acquisition of Vizio (VZIO), a well-known maker of smart televisions. With this calculated move, Walmart is positioned to strengthen its position in the advertising industry and maybe take control of over 25% of the US television market.

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As of Monday’s closure, the alleged offer is around 30% more than Vizio’s $1.54 billion market value. This project is in line with Walmart’s strategy move to higher-margin businesses, particularly Walmart Connect, its division for retail media advertising. Walmart Connect facilitates targeted ad placements for brands, both on its digital platform and within its physical stores, including digital displays, connected TVs, and radio broadcasts.

With its ad business witnessing robust growth since its inception in 2021, surpassing $3 billion in sales last year, Walmart eyes Vizio’s expansive user base of nearly 18 million individuals as a significant asset. Moreover, Walmart stands to benefit from Vizio’s lucrative software platform business, boasting impressive margins of 60% and annual advertising revenue growth of 27%.

Furthermore, through this acquisition, Walmart could consolidate its position in the U.S. television market, laying claim to approximately 22% of TV sales through both its private-label brand and Vizio. Vizio, founded by William Wang in 2002, views Walmart as its primary customer, with a longstanding track record of being the leading television brand sold at Walmart based on sales figures.

However, this development poses a potential challenge for Roku, another player in the smart TV and streaming device market, given Roku’s exclusive agreement with Walmart to retail products through Roku devices.

In addition to these strategic maneuvers, Vizio has recently expanded its WatchFree+ streaming service, experiencing a substantial uptick in viewership and introducing new features aimed at enhancing content discoverability. Internal data indicates a doubling of WatchFree+ viewing hours over the past year, underscoring the growing popularity of its offerings among consumers.

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