Target Stock Tanks: Why Retail Giant’s Shares Just Got Hammered

Another brutal day for big-box retail as Target shares crater under pressure.

Earnings Miss Triggers Selloff

Target's quarterly numbers landed like a lead balloon—missing analyst projections across key metrics. Same-store sales growth stalled while operating margins compressed. The market wasted zero time punishing the disappointment.

Consumer Spending Slowdown Bites

Discretionary spending is drying up faster than a puddle in the desert. Target's core middle-income shoppers are pulling back hard on non-essentials. When wallets snap shut, retailers like Target feel it first—and hardest.

Inventory Glut Compounds Pain

Supply chain improvements arrived too late to prevent a stockpile of slow-moving merchandise. Now they're stuck discounting to clear shelves—crushing profitability in the process. Nothing says 'retail distress' like margin-crushing fire sales.

Another reminder that traditional retail operates on razor-thin margins while crypto markets bounce 20% on pure vibes. Maybe they should've allocated 1% of their inventory budget to Bitcoin instead.

Can Target stop share losses?

In the second quarter, Target's revenue fell 0.9% to $25.2 billion, while earnings per share declined a more severe 20.2% to $2.05 as tariffs hit margins. While revenue declines and margin compression certainly weren't ideal, those figures actually came in ahead of expectations. Same-store sales actually improved from a 3.8% decline in the first quarter to a 1.9% decline in Q2, fueled by 4.3% growth in digital sales.

Given the improving trends, it might have seemed odd the stock was down so much. This could be because Cornell is well regarded in the business, or because investors WOULD have preferred an outside appointment. Amid the rapid post-pandemic inflation, Target has lost some share to lower-cost(WMT 1.05%) and(COST 1.20%), so some investors may have wanted an outsider with a fresh vision.

Image source: Getty Images.

Target's stock is getting interesting

Shares are trading at just 10.5 times trailing earnings with a 4.3% dividend yield. Management is forecasting a slight earnings decline this year, to between $7 and $9, but even the $8 midpoint would put shares at just around 12 times this year's adjusted earnings.

That's a very low valuation, especially in today's relatively expensive market. Therefore, value investors may wish to dig into Target's current turnaround efforts and Fiddelke's background.