Heyy. So Walmart seems to be a good, investible company. I foresee revenue shrinkage here in the US and will talk about that in this post. So let's start with the basics.
So Walmart has only missed earnings estimates **five** **times** **since 2015**. Walmart tends to do well with revenue growth. This earnings tomorrow morning will be time number 6.
Last earnings report, walmart lowered their guidance and **expected to lose money this quarter because of** ***Tariffs*****.** I am making this post not because of tariffs, but because of ***Deportations***. I will not be taking any stances in this post--just talking about the theoretical impact on their revenue.
So to start, let's get some basic demographics down. In the United States, around 18.9% of the US and are the second largest racial/ethnic group after nonhispanic whites. Below is a photo to show the ten states with the largest representation of hispanics. There are an estimated 62 million hispanics.
[California and Texas are the biggest two. Going all the way down to Arizona and New Mexico. ](https://preview.redd.it/nsxgzi47xr0f1.png?width=1223&format=png&auto=webp&s=2f0038e0dd29896216fbaa52122b6d00bc72db63)
So now we need to look at Walmart's consumer data. Walmart estimates that about .14 of their customers are hispanic. Now, this [website](https://www.contimod.com/walmart-statistics/#:~:text=Walmart%20serves%20over%2037%20million,6.25%25%20from%202023%20to%202024\) has a bunch of other data on the consumer that you could look at if you want to, but these are the important numbers.
**The Impact on expedited deportations**
According to this [website](https://www.americanimmigrationcouncil.org/research/mass-deportation), illegal immigrants produce quite a significant chunk of the US economy. The immigrants usually pick agriculture or construction work and pay quite a bit to businesses and our governments without receiving benefits like a citizen would. I don't think I need to say, but if agriculture product is harder to get, that leads to slower supply lines, leading to higher demand, leading to higher prices to offset the cost, not to mention the inflation we've already been seeing. Simple supply and Demand.
**This part is speculation**
I live in a town with a large number of hispanic people here. Me hablo un poco español de colegio. This, just as a source, wouldn't suffice because anecdotal evidence is fallacious. That being said, let's do a thought experiment. Let's say our non english or little english-speaking amigos see that ICE are ramping up deportations, xenophobia is rising and the hispanics are experiencing more of that, etc etc. How do you think they are going to act? I think that if they fear deportation, are upset with xenophobia, and want to stay as "safe" from ICE as possible, they will stay with hispanic areas as much as possible. This will drive away revenue from previous places they were shopping at and create small business opportunities with their friends/family that do have legal status and can open shops. My speculation is that walmart did not account for a drop in hispanic customers when they lowered their guidance last quarter. So let's do some math.
Walmart has 8 billion shares in its company and netted 5.254 bill in income. With division, this comes to .65675 or .66 EPS. They lowered their guidance last quarter to .59 EPS for this quarter from tariffs affecting goods. Now, I think that some very educated people know their stuff and I will not argue with that number based on tariffs. I think that tariffs and inflation probably did have a big effect on walmart. However, I do want to show some speculative math here. Let's say that the .14 or 14% of their hispanic customers dropped to 10% this quarter which is a pretty big jump, that will have changed their income to 4.729Bill or
**.591125 or .59 EPS**. Now I don't have many metrics I would need for better estimation such as average ticket, cost of goods, etc. but that EPS is not accounting for tariffs.
**Positions**
I have two walmart 93$ Puts expiring on 5/23.
[I know I am poor I work at Wendys](https://preview.redd.it/ix5ysjld2s0f1.png?width=1305&format=png&auto=webp&s=85a46265a5288db0ab10c7aff773dbf6966b15a3)
I have also prepared my banbet on the daily thread when I was up at 2 lmao.
TLDR: Walmart will miss estimates because of a drop in hispanic customers. Buy puts
Sources: [https://www.alphaquery.com/stock/WMT/earnings-history](https://www.alphaquery.com/stock/WMT/earnings-history)
[https://www.macrotrends.net/stocks/charts/WMT/walmart/eps-earnings-per-share-diluted](https://www.macrotrends.net/stocks/charts/WMT/walmart/eps-earnings-per-share-diluted)
[https://minorityhealth.hhs.gov/node/10/revisions/525/view#:\~:text=According%20to%202020%20Census%20data,group%20after%20non%2DHispanic%20whites](https://minorityhealth.hhs.gov/node/10/revisions/525/view#:~:text=According%20to%202020%20Census%20data,group%20after%20non%2DHispanic%20whites)
[https://www.contimod.com/walmart-statistics/#:\~:text=Walmart%20serves%20over%2037%20million,6.25%25%20from%202023%20to%202024\\](https://www.contimod.com/walmart-statistics/#:~:text=Walmart%20serves%20over%2037%20million,6.25%25%20from%202023%20to%202024\)
[https://www.americanimmigrationcouncil.org/research/mass-deportation](https://www.americanimmigrationcouncil.org/research/mass-deportation)
