digital commerce

‘It makes zero sense’: Why American investors aren’t sold on Walmart’s acquisition of Flipkart

The retail giant’s stock fell as much as 4% on the New York Stock Exchange the day the deal was announced.

Investors in the United States aren’t exactly kicked about the world’s biggest e-commerce deal.

On May 9, Walmart said it will spend $16 billion to buy a 77% stake in Flipkart, India’s largest homegrown e-commerce firm. With this deal, the US retailer has finally got a way into India’s retail market after playing at the fringes for over a decade.

However, Walmart’s investors in the US are hardly the most excited bunch. On the day of the announcement, Walmart’s stock fell as much as 4% on the New York Stock Exchange. The slump was driven by “skepticism about the cost of the deal” as well as the cynicism around whether the deal will really help Walmart gain ground against arch rival Amazon in India, The Wall Street Journal reported.

For Flipkart, Walmart has offered to pay at least five times more than its last biggest acquisition.

Data: S&P Global Market Intelligence
Data: S&P Global Market Intelligence

Here is a quick roundup of what some experts who track Walmart in the US have been saying.

Ben Thompson, a business, technology, and media analyst:

“I think investors got this deal exactly right: it makes zero sense. I read Walmart’s presentation and listened to the entirety of its call with investors and I remain as puzzled as I was when I heard the deal.

...I struggle to see what exactly the company can add: there was basically zero discussion of how Walmart will make it more likely Flipkart will succeed in its battle with Amazon. Walmart’s executives tried to argue that the benefit would go the other way – Walmart would learn from Flipkart – but wasn’t that the point of acquiring Jet.com?

Frankly, this deal reeks of empire building: Walmart is buying its share of Flipkart because it feels entitled to retail growth globally, but the reality is that Walmart’s investors would be far better served by Walmart investing the cash in its fight against Amazon or, if it feels it is already spending enough, returning the cash to shareholders who can decide on their own how to invest in the market (likely by buying Amazon shares, natch).

…Indeed, as far as I can tell, the only potential benefit to Walmart and its investors is that Walmart’s backing potentially makes Amazon’s fight for India more expensive. Even that, though, is likely to prove to Amazon’s benefit in the long run: Jeff Bezos’ company will almost certainly have a longer leash with investors than will Walmart; if the company wants to truly concern itself with Amazon the money would have been far better spent at home.

John Brick, Morningstar equity analyst:

The stock reaction yesterday was due in our view to management’s commentary around the expected 5%-11% decline to earnings over the next two years as a result of Flipkart failing to turn a profit and investments into the business.

…Flipkart is still maintaining its brand identity. Walmart will just supply better logistics, scale, and capital to support their venture. For that reason, we don’t see a change to how Indian customers will perceive the company.

Despite its tenure abroad, international stores (24%) may never reach the level of profitability seen in the US, as it lacks similar scale benefits and sells through a multitude of banners. (Walmart was squeezed out of Germany, Brazil, Russia, and South Korea.)

Amazon has a dominant position selling to millennials online, and it may be difficult for Walmart to unseat its rival.

Rupesh Parikh, an analyst at Oppenheimer:

This deal adds new risk at a time when investors have been looking at Walmart to streamline their business. This has the potential to really derail some of the progress they have made…Walmart is walking a fine line between investment and profitability right now. Growing an e-commerce company is really, really expensive, and there’s no guarantee that Walmart, or anyone, can do that very well.

Dan Binder, managing director at Jefferies:

Longer-term investors see value and short-term investors see dilution and near-term share weakness. Admittedly, even long-term investors may have to be very long-term in their view before this business breaks even, but perhaps less so, before value is realised directly in the Walmart stock. This could be achieved through an eventual Initial Public Offering of Flipkart, which would simultaneously create currency for Flipkart management to stay incentivised and provide Walmart significant returns on its initial investment

…To be clear, Walmart management has only said it supports Flipkart’s ambition to transition into a publicly-listed, majority-owned subsidiary in the future. How far in the future is unclear, but given clear advantages to doing this, we would be surprised if it was more than two to three years.

Walmart’s shares have been downgraded by several rating agencies over the last two days. Standard and Poor’s lowered Walmart’s outlook from stable to negative, owing to the rising leverage and risks due to the company spending to expand online and globally. The New York-based investment bank Oppenheimer & Co also slashed its rating from outperform to perform.

This article first appeared on Quartz.

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Swara Bhasker: Sharp objects has to be on the radar of every woman who is tired of being “nice”

The actress weighs in on what she loves about the show.

This article has been written by award-winning actor Swara Bhasker.

All women growing up in India, South Asia, or anywhere in the world frankly; will remember in some form or the other that gentle girlhood admonishing, “Nice girls don’t do that.” I kept recalling that gently reasoned reproach as I watched Sharp Objects (you can catch it on Hotstar Premium). Adapted from the author of Gone Girl, Gillian Flynn’s debut novel Sharp Objects has been directed by Jean-Marc Vallée, who has my heart since he gave us Big Little Lies. It stars the multiple-Oscar nominee Amy Adams, who delivers a searing performance as Camille Preaker; and Patricia Clarkson, who is magnetic as the dominating and dark Adora Crellin. As an actress myself, it felt great to watch a show driven by its female performers.

The series is woven around a troubled, alcohol-dependent, self-harming, female journalist Camille (single and in her thirties incidentally) who returns to the small town of her birth and childhood, Wind Gap, Missouri, to report on two similarly gruesome murders of teenage girls. While the series is a murder mystery, it equally delves into the psychology, not just of the principal characters, but also of the town, and thus a culture as a whole.

There is a lot that impresses in Sharp Objects — the manner in which the storytelling gently unwraps a plot that is dark, disturbing and shocking, the stellar and crafty control that Jean-Marc Vallée exercises on his narrative, the cinematography that is fluid and still manages to suggest that something sinister lurks within Wind Gap, the editing which keeps this narrative languid yet sharp and consistently evokes a haunting sensation.

Sharp Objects is also liberating (apart from its positive performance on Bechdel parameters) as content — for female actors and for audiences in giving us female centric and female driven shows that do not bear the burden of providing either role-models or even uplifting messages. 

Instead, it presents a world where women are dangerous and dysfunctional but very real — a world where women are neither pure victims, nor pure aggressors. A world where they occupy the grey areas, complex and contradictory as agents in a power play, in which they control some reigns too.

But to me personally, and perhaps to many young women viewers across the world, what makes Sharp Objects particularly impactful, perhaps almost poignant, is the manner in which it unravels the whole idea, the culture, the entire psychology of that childhood admonishment “Nice girls don’t do that.” Sharp Objects explores the sinister and dark possibilities of what the corollary of that thinking could be.

“Nice girls don’t do that.”

“Who does?”

“Bad girls.”

“So I’m a bad girl.”

“You shouldn’t be a bad girl.”

“Why not?”

“Bad girls get in trouble.”

“What trouble? What happens to bad girls?”

“Bad things.”

“What bad things?”

“Very bad things.”

“How bad?”

“Terrible!!!”

“Like what?”

“Like….”

A point the show makes early on is that both the victims of the introductory brutal murders were not your typically nice girly-girls. Camille, the traumatised protagonist carrying a burden from her past was herself not a nice girl. Amma, her deceptive half-sister manipulates the nice girl act to defy her controlling mother. But perhaps the most incisive critique on the whole ‘Be a nice girl’ culture, in fact the whole ‘nice’ culture — nice folks, nice manners, nice homes, nice towns — comes in the form of Adora’s character and the manner in which beneath the whole veneer of nice, a whole town is complicit in damning secrets and not-so-nice acts. At one point early on in the show, Adora tells her firstborn Camille, with whom she has a strained relationship (to put it mildly), “I just want things to be nice with us but maybe I don’t know how..” Interestingly it is this very notion of ‘nice’ that becomes the most oppressive and deceptive experience of young Camille, and later Amma’s growing years.

This ‘Culture of Nice’ is in fact the pervasive ‘Culture of Silence’ that women all over the world, particularly in India, are all too familiar with. 

It takes different forms, but always towards the same goal — to silence the not-so-nice details of what the experiences; sometimes intimate experiences of women might be. This Culture of Silence is propagated from the child’s earliest experience of being parented by society in general. Amongst the values that girls receive in our early years — apart from those of being obedient, dutiful, respectful, homely — we also receive the twin headed Chimera in the form of shame and guilt.

“Have some shame!”

“Oh for shame!”

“Shameless!”

“Shameful!”

“Ashamed.”

“Do not bring shame upon…”

Different phrases in different languages, but always with the same implication. Shameful things happen to girls who are not nice and that brings ‘shame’ on the family or everyone associated with the girl. And nice folks do not talk about these things. Nice folks go on as if nothing has happened.

It is this culture of silence that women across the world today, are calling out in many different ways. Whether it is the #MeToo movement or a show like Sharp Objects; or on a lighter and happier note, even a film like Veere Di Wedding punctures this culture of silence, quite simply by refusing to be silenced and saying the not-nice things, or depicting the so called ‘unspeakable’ things that could happen to girls. By talking about the unspeakable, you rob it of the power to shame you; you disallow the ‘Culture of Nice’ to erase your experience. You stand up for yourself and you build your own identity.

And this to me is the most liberating aspect of being an actor, and even just a girl at a time when shows like Sharp Objects and Big Little Lies (another great show on Hotstar Premium), and films like Veere Di Wedding and Anaarkali Of Aarah are being made.

The next time I hear someone say, “Nice girls don’t do that!”, I know what I’m going to say — I don’t give a shit about nice. I’m just a girl! And that’s okay!

Swara is a an award winning actor of the Hindi film industry. Her last few films, including Veere Di Wedding, Anaarkali of Aaraah and Nil Battey Sannata have earned her both critical and commercial success. Swara is an occasional writer of articles and opinion pieces. The occasions are frequent :).

Watch the trailer of Sharp Objects here:

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This article was published by the Scroll marketing team with Swara Bhasker on behalf of Hotstar Premium and not by the Scroll editorial team.