why is walmart stock going down

why is walmart stock going down — This article explains the February 2025 selloff after Walmart’s earnings and conservative fiscal‑2025 guidance, the key drivers (guidance, consumer trends, tariffs...

2025-08-25 01:43:00

By Emma Shah

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Why is Walmart stock going down?

Asking "why is walmart stock going down" became common after Walmart Inc.'s February 2025 earnings release and the market's swift reaction. In this article you'll get a clear, source‑based explanation of the immediate drivers behind the drop, the company and macro context, what analysts and media highlighted, and the indicators investors should monitor next. The goal is to summarize verifiable facts and market commentary (dated where relevant) so readers understand why the share price tumbled and what to watch going forward.

Walmart's share price fell sharply after its Feb. 20, 2025 earnings report largely because management issued conservative fiscal‑2025 guidance that suggested slower profit growth than investors expected. Even though the quarter included revenue and e‑commerce positives, the cautious outlook, coupled with heightened sensitivity to U.S. consumer spending and potential tariff risks, triggered an immediate market selloff.

Company background and market role

Walmart Inc. (NYSE: WMT) is the largest U.S. retailer by revenue and one of the world's largest employers and grocery operators. The company operates thousands of brick‑and‑mortar stores across the U.S. and internationally, plus an expanding e‑commerce business that competes in online grocery and general merchandise. Because of its scale and grocery exposure, Walmart's results are widely viewed as a barometer of U.S. consumer health and discretionary spending — earnings and guidance from Walmart often move sentiment across the retail sector and broader markets.

February 2025 earnings release and immediate market reaction

As of Feb. 20, 2025, according to Fortune, CNBC and Reuters coverage, Walmart reported its fiscal Q4/most recent quarter results and issued fiscal‑2025 guidance that was meaningfully more conservative than investor expectations. The market reacted within hours: Walmart's stock fell roughly 6% intraday on Feb. 20, 2025, and related retail peers experienced weakness that day. Multiple outlets documented the share decline and the emphasis was consistently on the cautious forward guidance rather than the quarter's headline beats.

Q4 / most recent quarter results

Revenue: Walmart reported revenue that beat consensus expectations for the quarter (As of Feb. 20, 2025, per CNBC and Reuters reporting). The company cited continued strength in certain retail categories and e‑commerce growth.
Adjusted EPS: Earnings per share came in roughly at or slightly ahead of some expectations once one‑time items were excluded, but management highlighted dynamics that affected margin expansion and near‑term profit growth.
E‑commerce and U.S. comps: Walmart disclosed roughly ~20% year‑over‑year growth in U.S. e‑commerce for the quarter (reported in company comments and press coverage on Feb. 20, 2025). The company also recorded positive comparable (same‑store) sales growth in core U.S. segments.

Notable positives in the quarter included the strong e‑commerce growth rate, stabilized same‑store sales, and a revenue beat. Those facts were widely reported by Reuters, CNBC and Fortune on and around Feb. 20–21, 2025.

Fiscal 2025 guidance and management comments

However, management's guidance for fiscal 2025 signaled slower profit growth than investors expected. As reported by Financial Times and Fortune on Feb. 20, 2025, Walmart guided to:

Sales growth in the range of approximately 3–4% for fiscal 2025.
Operating income growth expected to be in the low single digits (roughly a 3.5–5.5% range cited in press summaries).
An EPS range below the Street's consensus at the time, after factoring in potential headwinds and excluding certain one‑time items.

Walmart executives described the outlook as intentionally cautious and referenced “an uncertain time” for consumers and the macro environment (Financial Times, Feb. 20, 2025). Management said they were taking a conservative stance on margins and profit growth to account for potential cost pressures and consumer spending variability.

Primary factors behind the stock decline

Below are the principal factors identified by company comments, analysts and media coverage that explain why walmart stock going down during the Feb. 2025 episode.

Disappointing guidance and slowed profit‑growth outlook

Even after a quarter that delivered a revenue beat and solid e‑commerce growth, Walmart's conservative fiscal‑2025 guidance signaled that profit expansion would be slower than many investors had priced in. That mismatch between current strength and future conservatism is a common trigger for short‑term selloffs: investors often reprice shares to reflect weaker forward EPS trajectories.

Macro and consumer‑spending concerns

Market participants focused on signs of softer consumer demand. Because Walmart is heavily weighted to groceries and essential items, any signal of consumer pullback is seen as meaningful. As reported by USA Today/Reuters (Feb. 20, 2025) and CBS/AP coverage (Feb. 21, 2025), commentary from management and analysts flagged worries about U.S. consumer resilience.

Tariff and geopolitical risk

Management and some analysts pointed to potential tariff actions and broader trade policy decisions (including discussion of tariffs affecting imports) as a risk to Walmart’s low‑cost sourcing model and near‑term margins. Reports on Feb. 20, 2025 (Financial Times, Reuters) noted that tariffs or trade shifts could raise input costs or force sourcing changes, pressuring margins.

Valuation and investor expectations

Before the report, Walmart traded at valuations that left limited room for disappointment. TheStreet and other commentators later highlighted that historically elevated valuations for certain retailers made stocks more susceptible to sharp moves when guidance disappointed (TheStreet, May 14, 2025).

One‑time and headline adjustments

The company noted certain one‑time items and acquisition impacts (for example, integration costs tied to recent deals) and calendar effects that can affect year‑over‑year comparables. These items complicate EPS comparisons and influenced management’s conservative guidance range.

Market sentiment and sector dynamics

Broader market rotations in the days surrounding the earnings report amplified Walmart’s decline. When large cap retail names show signs of pressure, algorithmic and momentum flows can accentuate the move.

Collectively, these factors explain why walmart stock going down was the primary market narrative in late February 2025.

Analyst, media and investor commentary

Reporting from major outlets and analyst notes after Feb. 20, 2025 emphasized several recurring observations:

CFO and management tone: Analysts highlighted the cautious tenor from Walmart's CFO and CEO as a focal point (Financial Times, CNBC, Feb. 20, 2025). The wording around “prudence” and “uncertainty” was interpreted as management dialing back expectations to be conservative.
Tariff risk discussions: Some commentators debated whether Walmart could mitigate tariff-induced cost increases through supply‑chain shifts and private‑label expansion; others cautioned it could be a tangible near‑term headwind (Reuters and Fortune coverage on Feb. 20–21, 2025).
Valuation context: TheStreet and follow‑up analysis in May 2025 discussed how valuation levels made WMT more sensitive to guidance misses and broader market de‑risking.
Investor takeaway: Many institutional investors and analysts framed the episode not as a failure in operations for the quarter (which included beat metrics) but as a recalibration of future profit expectations. That nuance helps explain why the stock fell despite some positive operating signals.

Short‑term vs long‑term perspectives

Short‑term: Why traders sold

Traders and quant funds often react quickly to forward guidance because near‑term EPS trajectory drives models for momentum, options, and short‑term valuations. When Walmart’s guidance came in below consensus, short‑term selling pressure increased, producing the ~6% intraday decline on Feb. 20, 2025 (reported across CNBC, Fortune, Reuters).
Short sellers and funds adjusting exposure to the retail sector contributed to the speed and magnitude of the drop.

Long‑term: Why some investors remained constructive

Long‑term investors pointed to Walmart’s resilient grocery franchise, scale advantages, and ongoing e‑commerce gains as reasons the business can navigate short‑term margin pressure. The company’s dividend, cash flow generation and opportunities to expand private labels and online fulfillment were cited as structural positives.
Several analysts contemporaneously said that while the guidance forced a repricing, it did not fundamentally alter the company’s long‑term thesis for investors focused on multi‑year cash flows and market share retention.

Important reminder: this section summarizes market and media viewpoints and is not investment advice.

Historical context and comparable episodes

Retailers commonly experience share‑price weakness after issuing conservative guidance, even after delivering solid quarter results. Walmart itself has had prior episodes where forward guidance or consumer commentary triggered outsized moves. Markets tend to treat near‑term profit visibility and consumer demand signals as high‑value inputs; when guidance reduces that visibility, price adjustments happen quickly.

The Feb. 20, 2025 episode is comparable to prior retailer guidance shocks in that the operational quarter contained positives, but the forward outlook was tightened enough to force a significant revaluation.

What to watch next

Key indicators and catalysts investors and observers should monitor after the Feb. 2025 episode include:

Subsequent quarterly updates: Changes to guidance on the next earnings call will be decisive for sentiment.
Comparable‑store sales (comp sales): Monthly/quarterly comps in U.S. stores and Sam’s Club indicate consumer strength in essential categories.
E‑commerce growth rate: Trends in online grocery and general merchandise growth, and cost per order metrics for fulfillment.
Operating income margin trends: Improvement or deterioration of margins will affect EPS trajectories.
Tariff and trade policy developments: Any enacted tariffs, announced policy shifts, or public comments from trade authorities that influence import costs.
Cost of goods sold (COGS) and freight: Input cost trends and logistics expenses will impact margins.
Integration costs from acquisitions: Updates on acquisition impacts and one‑time items affecting EPS.

Specific metrics to track (quantifiable): comparable sales growth percentage, U.S. e‑commerce YoY growth rate, operating income growth percentage, EPS versus consensus, and any explicit market cap or average daily trading volume shifts after earnings.

As of Feb. 20–21, 2025 reporting, the headline metrics investors highlighted were the ~20% U.S. e‑commerce growth in the reported quarter, the fiscal‑2025 sales growth guidance near 3–4%, and operating income guidance in the low single digits. Those figures were central to why walmart stock going down received strong market attention.

Investor considerations and risk factors

The principal risks flagged around the Feb. 2025 episode included:

Tariff risk and sourcing disruption: Potential costs from trade policy could raise prices or reduce margins.
Slowing consumer spending: Any sustained pullback in discretionary spending could reduce sales in higher‑margin categories.
Supply‑chain or logistics cost increases: Freight and input cost volatility could compress operating income.
Valuation compression: If investor expectations remain depressed, multiple contraction could persist.

Possible investor responses (neutral framing):

Reassess valuation assumptions: Investors may revisit forward EPS and multiples in light of adjusted guidance.
Monitor fundamentals: Track comps, margins and e‑commerce KPIs for confirmation of trend changes.
Position sizing and hedging: Some investors adjust position sizes or use hedges to manage near‑term volatility.

All considerations above summarize common market reactions and analyst commentary; they do not constitute investment advice.

Timeline of the Feb. 2025 episode (concise)

Feb. 20, 2025: Walmart releases fiscal Q4/most‑recent quarter results. Company reports revenue beats and strong U.S. e‑commerce growth (~20% YoY) (reported by CNBC, Reuters, Fortune).
Feb. 20, 2025: Management issues conservative fiscal‑2025 guidance (sales growth ~3–4%, operating income growth low single digits), cites an “uncertain time” (reported by Financial Times, Fortune, CNBC).
Feb. 20, 2025: Market reaction — walmart stock going down roughly 6% intraday as investors digest the guidance (reported across major outlets including Fortune and Reuters).
Feb. 21, 2025: Further media coverage (CBS News/AP) and analyst notes expand on tariff risk and consumer spending concerns; follow‑up commentary focuses on valuation sensitivity and longer‑term company strengths.

References and further reading

As of the dates cited below, these reports provided the contemporaneous coverage used to summarize the episode:

As of Feb. 20, 2025, according to Fortune: coverage headlined the drop after Walmart lowered 2025 guidance and cited market reaction.
As of Feb. 21, 2025, according to CBS News / Associated Press: reporting framed the share decline around the lowered sales outlook and the market’s consumer‑spending worries.
As of Feb. 20, 2025, according to Financial Times: reporting quoted company language about an “uncertain time” and included detail on the cautious guidance.
As of Feb. 20, 2025, according to CNBC: coverage emphasized that Walmart said profit growth will slow and highlighted the market response.
As of May 14, 2025, according to TheStreet: analysis discussed valuation concerns and how alarm signals at large retailers can be amplified in the market.
As of Feb. 20, 2025, according to Sherwood News and Reuters/USA Today coverage: the initial market moves and investor reaction were documented, including the approximate intraday decline.

(These summaries present the core factual coverage and were the primary sources used in this article.)

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Further exploration: track Walmart's next quarterly update, monitor key retail comp reports, and watch trade policy announcements for confirmation of either an improvement in outlook or continued downside risk.

If you found this analysis useful, explore more market explainers and tools on Bitget to stay updated on macro and corporate news that moves markets.

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