Walmart’s Stock Takes a Hit: Should Investors See This as a Buying Opportunity?

Walmart, the world’s largest retailer, experienced a sharp drop in its stock price, marking its worst week in nearly three years. Despite beating analyst expectations in its earnings report on February 20, 2025, the stock tumbled almost 9%, leaving investors puzzled. Among those questioning Wall Street’s reaction is former Walmart U.S. CEO Bill Simon, who believes the market may have overreacted.

Why Did Walmart’s Stock Drop?

Following the earnings announcement, Walmart’s stock declined more than 6% in a single day—its steepest fall since 2023. The sudden drop was driven by concerns over slowing profit growth and the potential impact of new U.S. tariffs on imports from Canada and Mexico. Investors worried higher costs from these tariffs could pressure Walmart’s margins, despite the company posting strong financial results.

Bill Simon found the market’s reaction surprising. He pointed out that Walmart not only met but exceeded expectations, making such a sharp decline appear unwarranted. Companies that deliver on their targets typically see stock stability or growth, yet Walmart faced the opposite, adding to the confusion among analysts and investors.

How Much Will Tariffs Impact Walmart?

One of the main concerns driving the stock’s decline is the potential impact of tariffs on goods imported from Canada and Mexico. Investors fear higher costs could hurt Walmart’s pricing power and profitability.

However, Simon argues that Walmart is well-positioned to manage these challenges. Thanks to its vast supply chain network and flexible sourcing strategies, the retailer can mitigate tariff-related expenses. Walmart has the ability to shift suppliers, focus on private-label alternatives, and seek new distribution channels, reducing the direct impact of tariffs on its operations.

Simon used a simple analogy to illustrate this adaptability: If the price of avocados rises due to tariffs, Walmart can encourage shoppers to switch to salsa and queso instead. His point highlights that Walmart’s extensive product offerings and ability to adjust its inventory give it an edge in managing external challenges.

Is Walmart’s Stock Drop a Buying Opportunity?

While Simon had once warned that Walmart’s stock was in a “bubble” in 2024 due to higher-income shoppers fueling unexpected growth, he now sees the current dip differently. He believes many of these new customers could make Walmart a permanent part of their shopping habits, strengthening the company’s long-term outlook.

For long-term investors, Simon suggests that the stock’s pullback could be an opportunity to buy at a lower price. Although the stock is down around 10% from its record high on February 14, 2025, it remains up 64% over the last year, indicating strong overall market performance.

What This Means for Investors

The key takeaway is that Walmart remains a dominant force in retail despite this temporary setback. The company’s ability to navigate tariff concerns, maintain customer loyalty, and adapt to market changes keeps it well-positioned against competitors like Target, Amazon, and Costco.

History has shown that Wall Street doesn’t always react rationally in the short term, and this could be another such instance. For investors looking for long-term value, the recent drop in Walmart’s stock may be a chance to buy at a discounted price before the market corrects itself.

With Walmart’s track record of resilience and strategic adaptability, this decline may be just a small chapter in its ongoing growth story. Investors willing to take advantage of the dip could find themselves in a strong position in the long run.