To The Moon

$Walmart (WMT)$ announced its Q1 earnings report After that, the stock went straight up to new highs.

Q1 key performance

• Revenue of $161.51 billion was up 5.8% year-over-year, beating market expectations of $159.42 billion.

• Adjusted EPS came in at $0.60, beating estimates of $0.53.

• U.S. same-store sales increased 3.8 percent and Sam's Club same-store sales increased 4.4 percent.

• E-commerce sales grew 22% year-over-year, driven by third-party sellers and in-store pickup/delivery services.

• New businesses such as advertising and membership service Walmart+ contributed about one-third of the operating income growth.

• Revenues from the global advertising business grew 24%, with the U.S. up 26%.

• The number of third-party sellers grew by 36%, with more than 420,000 product categories.

• Company expects adjusted EPS of $0.62-$0.65 for the second quarter of fiscal 2025

Why is the intensity of the over-expectation so high?

1. The e-commerce business grew strongly, up 22% year-on-year, driven by third-party sellers and in-store pickup/delivery services. The e-commerce product line was also enriched by a 36% increase in the number of third-party sellers, with more than 420,000 product categories.

2. Walmart+, the advertising and membership services business, contributed about one-third of the revenue growth. Global advertising revenue grew by 24%, and in the United States by 26%.

3. Revenue in China increased by 16.2% on a plus split basis, primarily due to strong performance in Sam's Supermarkets and Walmart's e-commerce business. Overall international business sales increased 10.7% on a constant currency basis.

4. Not inflation-driven growth. Unit growth and market share gains were the main drivers of earnings growth. More consumers are choosing Walmart for everyday essentials and looking for discounted merchandise. U.S. same-store sales increased 3.8 percent, Sam's Club same-store sales increased 4.4 percent, and brick-and-mortar sales continued to grow.

Is the strong stock performance supported?

1. Wal-Mart raised its full-year earnings estimates and now expects full-year adjusted EPS to meet or slightly exceed its previous estimate of $2.23 to $2.37, with full-year revenue growth expected to be in the 3% to 4% range;

2. Gross margin expansion of 42 basis points, profit growth through refined inventory management and favorable business mix;

3. The growth of new businesses such as advertising and membership services draws the market's attention to the potential of technological innovation to drive business growth;

4. The company uses AI technology to improve operational efficiency in the following areas: inventory management, supply chain management, dynamically adjusted pricing, AI-powered chatbots, and AI to provide personalized product recommendations to customers.

All of this allows investors to take a more innovative view of this company's long-term growth