America’s Favorite Retailer Experiences a Big Drop

In my Buy or Bye? series, I take a popular stock, strip away all the hype, and let you know whether you should buy now, buy later or buy never.

Today’s video highlights the recent struggles of the world’s leading retail corporation as consumers change their buying habits to fight inflation.

Unfortunately for America’s favorite retailer, demand for merchandise is waning as COVID-19 fears are beginning to subside, leading Americans to spend more on experiences than goods.

This makes the company’s decision to increase its inventory by 33% in a bid to ensure a steady supply of product a major miscalculation.

The company experienced its biggest drop in almost 35 years when its stock plunged 11.4% in May after it reported that net income for the quarter fell to $2.05 billion.

Seeking Alpha called the stock “dead money“…

However, there may still be hope for the company…

Total revenue rose to $141.57 billion from $138.31 billion a year earlier, which beat Wall Street’s expectations by a landslide.

And same-store sales for its U.S.-based locations grew 9% on a two-year basis. E-commerce sales also rose 38% on a two-year basis.

On another positive note – for both the company and consumers – in the eyes of federal policymakers, any slowdown in merchandise inflation is positive. In fact, it may offer the opportunity for the Fed to slow interest rate hikes.

Just look at this headline from Bloomberg…

So if you’re wondering whether this recent plunge is a chance to buy the retailer’s stock on sale…

Or a sign that the company may soon be headed for the largely ignored clearance bin of has-been blue chip stocks…

I suggest you tune in.

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