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Walmart’s No Tesla, but That Doesn’t Mean It Can’t Try Autonomous Driving - Barron's

Illustration by Elias Stein

Walmart, a tech stock? After more than a year of testing, the retailer said that it would expand a pilot program using Gatik’s autonomous box trucks to operate a two-mile route between a distribution center and a Walmart store in Bentonville, Ark. Since July, a safety driver has accompanied the trucks. Now, 70,000 miles later, the trucks will go it alone.

Self-driving has slowly been arriving. Tesla recently rolled out a beta version of its FSD—short for full self-driving—software, and XPeng showcased self-driving software in October. Velodyne Lidar and Luminar Technologies both make laser-based radar and sensors and went public this year. Their combined market value exceeds $12 billion. Shares in auto-parts maker Aptiv, which integrates sensor data and self-driving technologies, is up 31% in 2020.

Autonomous driving may seem a leap for Walmart, but it’s clearly strategic. The retailer’s pending bid to invest in social-media app TikTok is an attempt to leverage its growing online presence while generating new income streams and attracting younger shoppers. Its subscription service Wamart+ and partnership with Shopify bolsters online and takes aim at Amazon.com. Walmart’s investment in Indian e-commerce company Flipkart has worked out.

The stock is up 23% this year and trades for 25 times estimated 2021 earnings, 20% over the S&P 500, though behind Amazon’s 50. Five years ago, Walmart traded for 14 times forward-year earnings—a discount to the S&P 500.

As for the next step in autonomous trucking: Walmart said that it would test longer routes and try delivering orders to a location for consumer pickup—with a safety driver.

Next Week

Monday 12/21

FactSet Research Systems and Heico release quarterly financial results.

The European Medicines Agency meets to review the Pfizer/BioNTech vaccine earlier than planned after pressure from Germany and other EU nations to move up the date.

Trip.com Group holds its shareholder annual meeting in Shanghai.

Tuesday 12/22

CarMax and Cintas host conference calls to discuss quarterly financial results.

The Conference Board releases its Consumer Confidence Survey, a monthly measure of public confidence in the health of the U.S. economy. Look for a reading of 97 for December, compared with November’s 96.1.

The National Association of Realtors releases its November tally of sales for existing single-family homes. NAR estimates that it captures 30% to 40% of all existing-home sale transactions with this monthly survey. Economists expect a seasonally adjusted annual rate of 6.675 million new-home sales, compared with October’s 6.85 million.

The Federal Reserve Bank of Richmond releases its Fifth District Survey of manufacturing for December. Expectations are for a 12 reading, compared with 15 in November. The composite index represents a weighted average of the shipments (33%), new-orders (40%), and employment (27%) indexes.

The National Basketball Association’s 72-game 2020-21 season begins.

Wednesday 12/23

The U.S. Bureau of Economic Analysis releases its monthly Personal Income and Outlays data. Look for personal consumption to increase 0.3% in December, compared with a 0.5% rise in November. Personal Income is expected to decline 0.3%, compared with November’s 0.7% drop.

The University of Michigan releases its final reading of the Index of Consumer Sentiment for December. Economists see a decline to 76.9 from the preliminary 81.4 reading for December.

The U.S. Census Bureau releases new-home sales for December. Look for a seasonally adjusted annual rate of 987,500 new units, compared with 999,000 units in November.

Paychex holds a conference call with investors to discuss quarterly financial results.

The Census Bureau releases its Durable Goods report for November. New orders for durable manufactured goods are expected to rise 0.55% after a 1.3% gain in October. Excluding transportation, new orders are seen edging up 0.5%, compared with 1.3% in October.

Thursday 12/24

Trading ends at 1 p.m. on the New York Stock Exchange and the Nasdaq for Christmas Eve. The bond market closes at 2 p.m.

Friday

Financial markets all over the world, including the U.S, are closed in observance of Christmas Day.

Write to Teresa Rivas at teresa.rivas@barrons.com and Al Root at allen.root@dowjones.com

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Walmart’s No Tesla, but That Doesn’t Mean It Can’t Try Autonomous Driving - Barron's
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