Full screen recommended.
"Walmart’s Worst Stock Crash In 35 Years Is Another
Sign That The Economy Is Rapidly Falling Apart"
by Epic Economist
"Now that a major recession has begun, economists would expect big retailers like Walmart to run into trouble as consumer spending dries up - and recent numbers show that’s exactly what is happening. The giant superstore chain experienced its largest single-day decline in 35 years after an extremely disappointing earnings report was released. According to Forbes, the drop was so brutal that the Walton family lost $34 billion in two days! Adding fuel to the fire, a potentially weak holiday season and falling demand are threatening to spark even more losses for Walmart, but the retailer isn’t alone. Many big companies are saying that inflation is eviscerating their profits and sales are going down far more rapidly than they’ve projected just a few months ago. Their woes are a reflection of an economy that is crumbling down in plain sight, and with economic activity contracting all across the board, businesses’ struggles have only just begun.
The last time Walmart saw such a wild market was on Friday, October 16, 1987 – the last trading day before the infamous "Black Monday" -- when shares of the superstore chain suffered their steepest one-day decline ever, crashing 11.7% in a single day. This year, right after releasing its fiscal report for 2023 earnings, shares of the world’s biggest retailer plunged by 11.4% in a single day. At a first glance, the drop was sparked by the most mundane of reasons: the company missed investors’ earnings expectations -- but other indicators show that this was just one element of a very bad year for Walmart stockholders.
Forbes exposed that the Walton family saw its fortune drop by nearly $34 billion in only two days after its fiscal report was released. “Jim, Rob, and Alice Walton, children of Walmart's founder, each lost roughly $9 billion, making them the hardest hit by the drop. Other Walton family members were affected by the decline, each losing more than $1 billion,” it reported.
As an industry leader, Walmart has dropped a big hint, suggesting that it does not think demand will be all that strong this holiday season. In September, the superstore chain announced it was hiring only 40,000 seasonal workers to help with the upcoming holiday demand. That's in stark contrast to the more than 150,000 workers it added in the same period in 2021.
Of course, it isn’t just Walmart that is having trouble navigating through the current macro environment. Online retailer and Walmart's rival Amazon. The company’s latest efforts to boost its revenue may not pay off, and after stating that inflation is “eviscerating” its profits and sharing a bleak forecast for the holiday quarter, the e-commerce giant saw its shares falling by 19%. For the fourth quarter, the world’s biggest online retailer forecasted net sales of between $140bn and $148bn. Analysts were expecting $155.15bn. “Early holiday marketing did little to boost sales growth while labor and delivery expenses continue to swell,” the company said.
Most Americans are already financially drained, and around two-thirds of U.S. households are saying they intend to tighten their belts and curb spending this holiday season. Needless to say, that will result in many more earnings disappointments and market losses in the final stretch of 2022 and well into 2023. Our economic scenario is looking very bleak right now, and what is happening to all of these major companies is just a hint of what smaller competitors will be forced to face in the coming weeks and months."
Comments here:
No comments:
Post a Comment