Walmart faced a tumultuous week as its stock suffered the worst weekly performance since May 2022, plummeting nearly 9%. The challenging period coincided with the release of the company's fiscal fourth-quarter results, which were discussed by Bill Simon, former Walmart executive, during an appearance on CNBC's "Fast Money." On the earnings day alone, Walmart shares fell over 6%, marking the stock's worst daily performance since November 2023.
Despite this downturn, Walmart's stock has seen remarkable growth over the past 52 weeks, rising approximately 64%. However, after reaching record highs on February 14, the stock is now down 10% from its peak. This recent sell-off stems from concerns over a slowing profit growth forecast and looming tariff fears, according to Simon.
"I absolutely thought their guidance was pretty strong given the fact that… nobody knows what's going to happen with tariffs." – Bill Simon
Simon, who now serves on the Darden Restaurants board and is chairman at Hanesbrands, expressed surprise at the market's reaction to Walmart's earnings. He believes the economic and geopolitical backdrop is unprecedented, influencing consumer behavior in unexpected ways.
"I thought if you hit your numbers and did well and beat your earnings, things would usually go well for you in the market. But little do we know. You got to have some magic dust," – Bill Simon
Interestingly, Simon perceives that higher-income consumers might make a permanent shift towards shopping at Walmart. Despite previously warning of a "bubble" at Walmart in May, he now sees an investment opportunity amid the stock's recent dip.
"I don't know how you could have done much better for the quarter." – Bill Simon
The former CEO finds the sell-off unusual but remains optimistic about Walmart's prospects. He suggests that even if U.S. tariffs against Canada and Mexico proceed, it should have minimal impact on Walmart.
"If you liked that story yesterday before the earnings release, you should love it today because it's… cheaper," – Bill Simon