Walmart Won This Round

India’s online video market is expected to reach over $2 billion in the next five years. It’s no wonder Netflix and Amazon are eyeing India as the next frontier for growth.

However, India already has a major online content provider called Hotstar with 150 million monthly users. Netflix and Amazon both struggled at first. They thought their model in the US and in other countries would seamlessly work in India. They didn’t understand the culture and what the culture wanted. They also didn’t realize 120 languages are spoken in India.

Walmart, the world’s largest retailer has struggled against Amazon on the internet. India, with 1.3 billion people is the next big potential prize after the U.S. and China, and so Walmart and Amazon has also been brewing for India’s e-commerce with the first round going to Walmart.

In May, Walmart bought 75% of India's largest online retailer Flipkart for $16 billion in May 2018. This was a major victory for Walmart because Amazon is the No. 2 e-commerce operator in India behind Flipkart.

But the Markets saw the purchase as a negative saying that Flipkart was struggling outside of India and Walmart’s profits would take a hit in 2019. The news immediately sent Walmart’s shares down 4%.

I actually think this was a great move for Walmart. In business you have to have a long term view, despite wanting to please Wall Street each quarter. For example, look at Amazon, they didn’t care about their profits for the first 20 years in business because their mission as to grow by any means necessary. Now they are the elephant in the room.

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The Indian government predicts by 2034 it's predicted to surpass the U.S. as the second largest e-commerce market in the world. Walmart doesn’t want to be the next Kmart or Sears, so this purchase was a no-brainer. But with slower growth in 2019 for the equity growth, I think Walmart goes lower before it goes higher in the near future. The chart suggest to buy Walmart between $70-$80.