Part 2/10:
The initial market reaction to the drop raises crucial questions surrounding the justification of these losses. Oliver Chen, a senior research analyst at TD Cowen, explained that one main aspect contributing to this downturn is Walmart’s high price-to-earnings (PE) ratio—the stock currently trades at approximately 38 times earnings, significantly above its three-year average of 24 times. With elevated expectations already built into the stock’s pricing, any underperformance or lower guidance instigates a swift and pronounced reaction from investors, as they adjust their forecasts amid shifting dynamics in the retail sector.