Traders,

I have good news and bad news regarding Walmart stock.

First, the bad: Shares of the ubiquitous retailer tumbled nearly 10% last night after the company slashed profit expectations for the current quarter and the rest of the year. Inflation was to blame as the higher cost of necessities stole money that otherwise would have gone toward higher-margin goods, including clothing and other discretionary items.

Per CNBC, “Walmart said it now anticipates adjusted earnings per share for the second quarter and full year to decline around 8% to 9% and 11% to 13%, respectively. It had previously expected them to be flat to up slightly for the second quarter and to drop by about 1% for the full year.”

Now the good news: WMT stock entered yesterday having rallied $15 off the lows. Because of the gain, all last night’s seemingly disastrous decline is doing is returning prices to the lows. Shareholders aren’t experiencing new pain, only old pain refreshed. Of course, if the low of $117.27 doesn’t hold, well, watch out below.

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Chart of the Day: Walmart ($WMT)

Yes, the selloff hurts. But remember, at some point, the earnings decline will be priced in, and Walmart will recover.

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