Walmart+: The Shopping Edge That Leads to 4X More Spending

Retailers are all facing similar headwinds right now, including cautious consumers, sticky inflation, and elevated fuel costs. But according to stock prices after recent earnings reports, among Walmart (NASDAQ: WMT), Costco Wholesale, and Target, investors are most concerned about Walmart.

From May 20 (the day before Walmart reported fiscal first-quarter 2027 earnings) to May 29, Walmart's stock price dropped 11.5%. That said, its 2027 first-quarter earnings call also highlighted something easy to miss: It has tapped into a growing revenue generator through its Walmart+ subscription that can give the company a long-term edge.

Always bringing in cash

In 2020, the retail giant launched Walmart+, which offers perks such as gas savings, free delivery, and early-access deals, among other benefits. Customers don't need a membership to shop at a Walmart store, unlike Costco's model. But the numbers suggest those with a Walmart+ subscription are likely to visit and spend more at Walmart.

In the first-quarter earnings call, for the period ended April 30, management shared that Walmart+ members generally spend four times more than nonmembers. Those members also visit Walmart websites seven times more than nonmembers throughout the year. Walmart reported that revenue from its subscription service for the quarter rose by double digits.

Concerns remain, but so does the upside

Walmart mentioned higher fuel prices several times in its earnings report, so that is an issue it will have to continue to navigate. It also didn't raise its 2027 fiscal guidance, as investors had hoped.

That said, the retailer is building out its revenue generators, making it more robust so that it can handle bumps in the road. Its Walmart+ subscription plan is a subtle but powerful business strategy, as those with a membership want to get their money's worth, making them more inclined to visit the retailer's store or shop on its website. In February, it was estimated that there were 28.4 million Walmart+ members. The company is also generating more money from advertising and online sales.

The short-term story now centers on a cautious forecast. But there's plenty of future upside as Walmart keeps adding members to its subscription service and builds up the potential of its other revenue generators.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale, Target, and Walmart. The Motley Fool has a disclosure policy.