Question

What are some risks with buying walmart's stock right now?

Answer 1

Walmart Stock History:

• Walmart Inc. was founded by Sam Walton in the year 1962 and incorporated in the year 1969.
• During the month October 1970, Walmart's Stock started trading with initial public offering of 300000 shares at the price of $ 16.50 per share.
• In the year 1972, Walmart was listed in New York Stock Exchange.
• In the year 2020, Walmart is world's largest multinational retail corporation with more than 11500 stores across 27 countries in the world and substantial online presence.
• The current Market Capitalization of Walmart around $366.61 billion. Price per share as on 24th Apr, 2020 is $129.44

Current Situation of Walmart's Stock:

• Despite the recent turmoil "the Corona outbreak", the S&P 500 has cratered around 25% while Walmart's stock is keep rising and shows upper trend.
• In the last 1 month stock price of Walmart has been increased around 18% from $109 to $129.

Reason behind "Walmart makes run all time high"

• The Unfortunate spread of COVID-19 has created scenario of "panic buying" which results into unexpected rise in demand for grocery and other household products.
• Below is the trend of Stock price of Walmart Inc. of past 6 months:

Risk in Buying Walmart's Stock:

• Walmart's stock shows very high historical volatility in previous 30 days.
• Current increase in demand is due to COVID-19 outbreak where Walmart has achieved around 2.5% revenue growth. However, once the COVID 19 situation is under control, there is a quite possibility of fall in demand as a result of current panic buying.
• In case economy will go into depression/recession stage, Walmart's share is likey to fall by substantial percentage.
• Walmart has very huge financial leverage which indicates difficulties in generating enough cash to satisfy its financial commitments.

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