Walmart (WMT) Stock Falls Hard. But Its Ad Business Tells a Different Story
TLDR
- WMT stock opened at $102.63 on Friday, down from a 52-week high of $135.15, after losing roughly one-fifth of its value since May highs.
- Q2 comparable U.S. sales came in at 2.6%, missing the 3.8% estimate, sending the stock down 9.2% in a single day.
- Walmart’s advertising business grew 38% year-over-year, with Walmart Connect up 43%, and advertising plus membership fees now account for about one-third of operating income.
- Despite the selloff, 29 of 32 analysts rate WMT a Buy, with an average price target of $129.57, implying around 26% upside.
- WMT still trades at roughly 36x forward earnings, well above the industry average of 15x, but below the 46x it commanded before Q1 earnings.
Walmart (WMT) stock has had a rough few months. After hitting a 52-week high of $135.15 and briefly crossing the $1 trillion market cap mark, the stock has been cut down hard. It opened at $102.63 on Friday, putting its market cap at around $816 billion.
Two earnings reports did the damage. Q1 in May showed strong revenue, up 7.3% year-over-year, but EPS guidance missed expectations. The stock dropped about 7% that day. Then Q2 results landed on August 20, and the reaction was worse.
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