Midnight Trader

A Wal-Mart Earnings Miss Is Likely to Entice Short Sellers

As you can see from the price action in WMT since the article was posted on 11/12, shares have fallen as predicted.


On Nov 12 01:44 PM Jake Huneycutt wrote:

> I'm not exactly sure where you are hearing masses of people suggesting
> that a company is "too big for its stock price to go down" --- especially
> right now. It sounds as if you are arguing against a ridiculous
> straw man.
>
> There's definitely a case to be made that Wal-Mart's stock is overvalued,
> but I don't get the point in this article. We're in the midst of
> one of the worst stock market crashes in history and nearly the entire
> market has gone down --- who on Earth is arguing that there are companies
> "too big" for stock market price declines?
>
> The only reason Wal-Mart has been semi-immune thus far has less to
> do with "being big" and everything to do with being in an industry
> that happens to benefit from a recessionary environment --- groceries.

A Wal-Mart Earnings Miss Is Likely to Entice Short Sellers

I'm certainly not saying WMT is going to or even likely to go bankrupt. The message here is that there are no sacred cows in this market and in this economy. Stock prices can fall dramatically without the underlying business going out of business.

Too many investors have forgotten or simply ignore risk because its "too big to fail" or "too big for the stock price to fall". I urge investors to rethink risk.



On Nov 12 09:44 AM Jake Huneycutt wrote:

> What do you mean "is Wal-Mart too big to fail?" Are you suggesting
> that Wal-Mart is going to go bankrupt? And how do you jump from
> Wal-Mart missing earnings expectations to Wal-Mart being on the brink
> of bankruptcy?
>
> Wal-Mart may be a little bit overvalued; that's certainly arguable,
> but I'm baffled by the comparison to Circuit City.