Seeking Alpha

New Wal-Mart money service rattles payments sector

  • Wal-Mart (WMT +0.2%) announces the launch of Walmart-2-Walmart Money Transfer Service at more than 4K of its stores in the U.S. The company is partnering with Euronet (EEFT +4.2%) on the initiative.
  • The money transfer service is significantly cheaper than alternatives, according to Wal-Mart.
  • Sector watch: Shares of Western Union (WU -5.8%), Xoom (XOOM -2.7%), Green Dot (GDOT -1.8%), and Moneygram (MGI -15.4%) are getting smacked around a little bit off the development.
Comments (11)
  • Patent News
    , contributor
    Comments (1312) | Send Message
     
    they were dying businesses before. but 10,000 $ bet that there will be 10 articles over next few months imploring how they are huge bargains?
    17 Apr, 10:33 AM Reply Like
  • micium
    , contributor
    Comments (108) | Send Message
     
    I think this is a smart move for Wal-Mart as it is a good fit. I thought that Wal-Mart was already offering Western Union in some of its stores. It should be good for Wal-Mart and more economical for the users of this service.
    Wal-Mart may need to up its security in some locations if business results in accumulating significant sums of cash from money being transferred out.
    17 Apr, 11:33 AM Reply Like
  • chopchop0
    , contributor
    Comments (3107) | Send Message
     
    AMZN gets crazy multiples for just growing revenues (and forgoing profit for said revenues and business growth). Though it's gotten a little less crazy, AMZN is ridiculously overvalued.

     

    This is yet another example of WMT doing the same "business killing/maiming", this time against the other money-transfer services, yet the market doesn't give it enough love IMO.

     

    Long WMT and loving this new development. Hopefully one day the government will allow them to open their own bank.
    17 Apr, 12:58 PM Reply Like
  • James Sands
    , contributor
    Comments (1900) | Send Message
     
    Compared to Walmart Amazon is richly valued, but Amazon's business is changing from e-commerce to other tech services. Not to justify, but Amazon compared to other overvalued tech-peers like Netflix, LinkedIn, Twitter is a much better value. If the company generates 10% in profit 10-years from now (I do not like saying this because the company is a serial underperformer), today's price may be a bargain.

     

    10% profit is reasonable for any large-scale business, most are around this level even with slow growth. The highest profit margin Amazon has generated between 2000 and 2013 is 3.7% in 2009.

     

    For this reason, I modeled a conservative 4% profit margin 10 years out. With growth potential pegged to the 2-yr estimates, that places a potential return of 6% per year from today's price accounting for share dilution of 2% per year and a P/E of 30.

     

    Better investment opportunities out there for growth and earnings. If Amazon were to get to the $175-225 level, then it would be worth considering.
    17 Apr, 02:26 PM Reply Like
  • c5966
    , contributor
    Comments (124) | Send Message
     
    I'm sure WMT could open its own bank tomorrow, if it could get away with greasing enough palms in Washington. LOL
    18 Apr, 12:49 AM Reply Like
  • c5966
    , contributor
    Comments (124) | Send Message
     
    With the exception of Wal-Mart, all the other stocks you mentioned follow The Greater Fool Theory of investing.
    18 Apr, 12:52 AM Reply Like
  • James Sands
    , contributor
    Comments (1900) | Send Message
     
    Not if they were at the right price.......but current valuations are a tough sell or buy... I don't know..
    18 Apr, 02:13 AM Reply Like
  • sop2510
    , contributor
    Comments (5) | Send Message
     
    That will definitely make it easier to move money across the Mexican border. WMT will become a one-stop shop.
    17 Apr, 03:14 PM Reply Like
  • DGI_Dan
    , contributor
    Comments (75) | Send Message
     
    This service at moment is limited to US stores only. I am sure they can later expand to all Walmarts across the globe.
    17 Apr, 05:09 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (3572) | Send Message
     
    Hopefully they do not expand service to Nigeria or Cote d'ivoire.... That would surely cut into (WU)'s revenues...
    17 Apr, 09:14 PM Reply Like
  • TAS
    , contributor
    Comments (1977) | Send Message
     
    Foolish me. I thought the US Government was the big dog in the money transferring service.
    17 Apr, 11:13 PM Reply Like
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