TLDRWalmart shares started trading at $102.63 Friday, representing a decline of nearly 24% from the 52-week peak of $135.15 reached in May.Second quarter comparable U.S. sales registered 2.6%, falling short of the 3.8% consensus forecast, triggering a 9.2% single-day decline.The company’s advertising segment expanded 38% annually, with Walmart Connect posting 43% growth, and ad plus membership income representing approximately one-third of total operating profit.Following the recent selloff, 29 out of 32 Wall Street analysts maintain Buy ratings, with a consensus price target of $129.57 suggesting roughly 26% potential upside.Shares currently trade at approximately 36x forward earnings, significantly higher than the sector’s 15x average, though down from the 46x multiple before first quarter results.Walmart (WMT) shares have experienced significant turbulence over recent months. Following a peak at $135.15 per share and temporarily achieving a $1 trillion market capitalization, the retail giant has seen substantial value erosion. Friday’s opening price of $102.63 placed the company’s market value around $816 billion.Micron Technology, Inc., MUA pair of disappointing quarterly reports triggered the decline. May’s first quarter showed solid revenue expansion of 7.3% compared to the prior year, yet earnings per share projections fell below expectations. Shares retreated approximately 7% following that announcement. The second quarter release on August 20 produced an even sharper response.Comparable sales for U.S. operations registered 2.6%, substantially below the 3.8% Wall Street consensus. Third quarter EPS guidance ranging from $0.62 to $0.64 also disappointed versus the $0.68 analyst estimate. WMT plummeted 9.2% during that trading session, erasing over $80 billion in shareholder value.However, the comparable sales figure requires additional perspective. Prescription drug pricing regulation changes negatively impacted the health and wellness segment. Excluding this factor, comparable sales measured closer to 3.4%. While still missing expectations, the underlying performance proved less severe than surface-level metrics suggested.Second quarter earnings per share reached $0.81, surpassing the $0.74 analyst consensus. Total revenue of $187.94 billion exceeded the $186.64 billion forecast, representing 5.9% year-over-year growth. The company’s return on equity stood at 21.83%.Digital Operations Continue Strong MomentumAlthough comparable sales metrics dominated market attention, Walmart’s digital segments demonstrated robust performance. Worldwide e-commerce revenue expanded 23% year-over-year. Domestic e-commerce sales increased 24%. Marketplace transactions surged 52%, membership fee income advanced 17%, and store-fulfilled delivery services grew 43%.The advertising division emerged as the clear winner. Total advertising income climbed 38%, with Walmart Connect specifically posting 43% growth. Industry analysts estimate gross profit margins for the advertising operation approach 70%. Combined advertising and membership revenue now generates approximately one-third of Walmart’s total operating income, despite constituting a small portion of overall sales.Walmart Connect operates on a simple but effective framework. Consumer packaged goods brands pay for prominent placement when customers search the platform. Each transaction generates dual revenue streams—retail margin from the purchase plus advertising fees from brands seeking visibility.Premium Valuation Persists Despite CompressionWMT shares remain expensive by traditional metrics. Trading near 36x projected earnings, the stock commands a significant premium over the industry’s 15x average and the company’s historical five-year average of approximately 30x. Prior to first quarter results, the multiple reached 46x. Before second quarter earnings, it stood at 38x. Two consecutive valuation resets have provided some relief.Despite recent weakness, Wall Street sentiment remains overwhelmingly positive. Among 32 analysts tracking WMT, 29 maintain Buy recommendations.The consensus price target stands at $129.57, indicating approximately 26% appreciation potential from present levels. Jefferies maintained its Buy rating with a $120 objective. Both Guggenheim and Mizuho established $130 targets.Regarding insider activity, Executive Vice President Daniel Danker divested 50,644 shares on August 26 at an average price of $105.35, executed through a predetermined 10b5-1 trading arrangement to satisfy tax liabilities associated with vesting stock compensation.The post Walmart (WMT) Stock Down 24% From Peak as Ad Revenue Surges 38% appeared first on Blockonomi.