Walmart Shares Plunge 10% As Drug Price Decline Spooks Investors Despite Earnings Beat

Walmart shares fell nearly 10% in trading on Thursday, despite the retail giant reporting better-than-expected revenue and raising its sales and earnings outlook for the year.

The stock was trading at $103.24, down $11.06, or 9.68%, as of 12:05 p.m. ET on August 20, according to the market data provided.

The decline came as investors focused on weaker drug prices, which weighed on Walmart's US sales. The company, however, continued to benefit from strong growth in its online business.

Walmart reported a 5.9% rise in revenue to $187.9 billion, slightly ahead of S&P Capital IQ estimates of $186.8 billion.

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The company said sales benefited from strength across grocery, personal care, beauty, pet supplies, toys and fashion.

Walmart also raised its fiscal-year net sales growth forecast to 4%-5%, from its earlier estimate of 3.5%-4.5%. Its adjusted earnings-per-share outlook was increased to $2.80-$2.87, compared with the previous range of $2.75-$2.85.

“Our multi-year growth in eCommerce is evidence that customers are choosing Walmart because we deliver price, speed, and convenience across a broad assortment,” Walmart CEO John Furner said in a statement.

Despite the stronger overall performance, falling drug prices emerged as a concern for investors. Walmart said the decline was partly linked to the federal government's Medicare prescription drug regulations.

The company specifically pointed to lower prices for GLP-1 drugs, saying prescription growth was “more than offset by price-mix headwinds.”

The pressure comes as the US prescription drug market experiences significant price deflation. According to Axios, drug prices are seeing their biggest decline in generations.

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For Walmart, the impact of lower drug prices is significant given the size of its pharmacy business and its broader exposure to US consumers.

Investors will also be watching the company's response to tariffs. Walmart said it is reinvesting tariff refunds in lower prices, as it seeks to maintain its value proposition for consumers.

While stronger e-commerce sales and an improved earnings outlook point to continued consumer demand, the sharp pre-market decline in Walmart shares shows that investors remain concerned about pressure on margins and drug-related sales.

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