Wal-Mart Stock Soars 20% This Year, Despite E-Commerce Failure

By Douglas A. McIntyre Updated Jan 13, 4:56AM EST · Published Aug 4, 8:25AM EDT

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Wal-Mart Stock Soars 20% This Year, Despite E-Commerce Failure — © courtesy of Wal-Mart Stores Inc.

As the press focuses on Wal-Mart Stores Inc.’s (NYSE: WMT) possible buyout of e-commerce business Jet.com to help the world’s largest retailer’s own online efforts, Wal-Mart has seen its stock price rise of 20% this year. It is among the very top performers in the Dow Jones Industrial Average. Its e-commerce failure and stock market success seem remarkably disjointed.

Jet.com claims it competes with Amazon.com Inc. (NASDAQ: AMZN). Nothing could be further from the truth. Jet.com almost certainly would have to raise more money to increase its business much.

However, it is reasonable for Wal-Mart to consider a buyout of Jet.com. Its own online revenue is estimated at $14 billion, out of its $428 billion in sales. At that size, it does not have any chance to catch Amazon, which has an annual revenue run rate of $100 billion, although some of that is from its Amazon Web Services (AWS) cloud business.

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The fact of the matter is that the traditional retail business is still a good one, at least for Wal-Mart. Its annual revenue was $447 billion in its fiscal 2012. In its most recently reported year, the number has risen to $483 billion. The $36 billion increase is huge in an industry in which companies like Macy’s and J.C. Penney are falling apart.

No one would argue that Wal-Mart needs to double its online revenue. And no one would argue that it has not been aggressive enough as it tries to increase sales in the business. However, with its balance sheet and cash flow, Wal-Mart can do radical things, like extend free shipping to all its e-commerce sold items, or buy a streaming video company like Hulu to compete with Amazon Prime. Wal-Mart still has the capacity to transform its online business. What it needs to do is make the decision.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.