Investors punished Walmart after Q2 earnings despite beating estimates and lifting FY27 outlook, citing margin concerns and reinvestment pressures.
Walmart shares plunged 9% to $103.84 on August 20, 2026, after reporting adjusted EPS of $0.81, above the $0.7413 consensus, and revenue of $187.94 billion, up 6% year over year. The company raised its FY27 adjusted EPS guidance to $2.80-$2.87 from $2.75-$2.85 and boosted sales growth forecasts to 4.0%-5.0% from 3.5%-4.5%.
Gross profit margin rose 96 basis points to 25.4%, with Walmart U.S. margins up 158 basis points, driven by tariff refunds. However, the 750-basis-point margin improvement was reinvested into over 11,000 price cuts, weakening Q3 guidance and disappointing investors despite the earnings beat.
The 9% drop marked Walmart’s worst earnings-day reaction in ten quarters and its fourth consecutive post-earnings decline, signaling skepticism over sustained margin expansion and reinvestment costs.