Walmart beat earnings expectations.
Walmart beat revenue expectations.
Walmart raised its full-year outlook.
And then the stock got CRUSHED!
So what happened?
In today's episode, we're diving into a great viewer question about Walmart and whether the recent selloff was justified. But to really answer that question, we need to look beyond Walmart's earnings report and ask a much bigger question:
Is the American consumer finally starting to crack?
Walmart's latest quarter gave Wall Street plenty to think about. U.S. comparable sales grew just 2.6%, the slowest pace in six years and well below expectations. At the same time, the company's e-commerce business grew 24%, earnings beat expectations, and management actually raised its full-year outlook.
So why did investors wipe more than $80 billion from Walmart's market value?
Because the market isn't simply looking at what Walmart earned yesterday.
It's trying to figure out what the consumer will do tomorrow.
We'll dig into:
- Why Walmart fell despite beating earnings expectations
- The slowdown in comparable-store sales
- Whether Walmart's valuation had simply gotten too expensive
- What management's guidance tells us about the months ahead
- Why higher-income consumers continue migrating toward Walmart
- What gasoline, food prices and inflation are doing to household budgets
- Whether the weakness is Walmart-specific—or something much bigger
Then we'll zoom out and look at the macro data.
July U.S. retail sales declined 0.6% month over month, even though they remained 5% higher than a year earlier. Consumer confidence has also weakened, with Americans becoming increasingly pessimistic about future business conditions and employment.
That's where this story gets interesting.
Because the consumer isn't necessarily collapsing.
There are conflicting signals everywhere.
Credit-card spending remains relatively resilient. Walmart continues gaining customers. E-commerce is growing. Yet confidence is deteriorating, retail sales have softened, gasoline prices remain elevated, and consumers are becoming increasingly cautious about the future.
So which side should traders believe?
The consumer may not be broken—but the cracks are becoming increasingly difficult to ignore.
And remember, consumer spending represents roughly two-thirds of U.S. economic activity.
If consumers begin pulling back, the impact doesn't stop at Walmart.
It can eventually flow through to retail sales → corporate earnings → employment → economic growth → Federal Reserve policy → the stock market.
That's why Walmart's 9% selloff deserves a much deeper look than simply saying, "They missed comparable-store sales."
For additional research, check out U.S. Census Bureau Retail Sales and The Conference Board Consumer Confidence Index.
Listen now:
👉 Is the Consumer Cracking?
Inside the episode:
- Why Walmart crashed after seemingly good earnings
- Walmart's slowing comparable-store sales
- Retail sales and consumer spending
- Consumer confidence and employment expectations
- Inflation and the impact of higher energy prices
- Are higher-income consumers beginning to trade down?
- What weakening consumption could mean for corporate earnings
- The potential implications for the Federal Reserve
- What all of this could mean for the stock market
Walmart may be the headline...
But the real story is the American consumer.
And if the consumer really IS beginning to crack, traders should be paying very close attention.
Hit Like, Subscribe, and send in your questions for the next TraderMerlin show!
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