Pro Perspectives 11/16/23





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November 16, 2023

Walmart beat on earnings and revenue this morning.  And the stock finished down 8%
Target beat on earnings and revenue yesterday.  And the stock finished UP 18%
As you can see in the chart below, we've had this performance divergence over the past year between two of the biggest retailers in the country. 
This reminds me of the Amazon/Walmart divergence of five years ago (2018).
We talked about it here in my daily Pro Perspectives notes.  
Here's a look back at that chart …
What was going on?
The market was pricing Amazon like a runaway monopoly — killer of all industries, especially retail.  And the perception had been that Walmart was destined to become another rise and fall story of a dominant American retailer.
But there was a clear and new catalyst that entered. Trump had made it very clear that he was not only looking to balance the playing field globally, but also domestically.  And that meant, the tech giants were due for some regulatory backlash.  Amazon was in the crosshairs — and it appeared that the foot was being lifted from the jugular of the old economy survivors. 
And the divergence was resolved (Walmart UP, Amazon Down) …
In the current case, the Walmart/Target divergence, Target has found itself in the crosshairs of political and cultural backlash.  But I suspect the WMT/TGT divergence will resolve in a similar way to the AMZN/WMT divergence.  It may have started this week.