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Walgreens Boots Alliance Faces Tough Days

Ellis HobbsAvatar
Written by Ellis Hobbs
Reviewed by Jack Kellogg Fact-checked by Tim Sykes

The significant shift in Walgreens Boots Alliance Inc.’s stock price can be attributed to the news highlighting their involvement in the opioid crisis settlements and leadership changes, raising investor concerns. On Friday, Walgreens Boots Alliance Inc.’s stocks have been trading down by -12.56 percent.

Turmoil in Retail: Recent Developments

  • The announcement by Walgreens to suspend its quarterly cash dividend seeks to bolster its balance sheet by cutting debt and increasing cash flow for a long-term turnaround.

Candlestick Chart

Live Update At 09:18:38 EST: On Friday, January 31, 2025 Walgreens Boots Alliance Inc. stock [NASDAQ: WBA] is trending down by -12.56%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

  • Investigations by Rosen Law Firm have been initiated for potential securities claims due to possible misleading business information by Walgreens Boots Alliance.

  • The Department of Justice filed a civil complaint alleging Walgreens dispensed millions of unlawful prescriptions, adversely affecting its stock value.

  • Unfavorable news reports indicate talks between Walgreens and Sycamore Partners have mostly ended, contributing further to stock price drops.

  • A plunge in Walgreens’ stock price followed revelations of alleged improper dispensing of opioids, resulting in significant legal and financial challenges for the company.

Financial Metrics and Implications

As millionaire penny stock trader and teacher Tim Sykes, says, “There is always another play around the corner; don’t chase just because you feel FOMO.” This wisdom is particularly relevant for traders who can easily get caught up in the emotional whirlwind of the market. It’s important to maintain a level head and remember that opportunities are always available if you’re patient and strategic in your approach. FOMO can lead to hasty decisions that don’t align with long-term success.

Walgreens Boots Alliance is under considerable financial strain as seen through its financial reports and key ratios. Recent news paints a grim picture of the retail giant’s performance and its potential trajectory. Earnings have been severely hit, showing troubling signs in the company’s profitability ratios. Gross margins around 17.6% hint at underlying issues in controlling costs or pricing strategies, further reflected in negative EBIT and EBITDA margins.

Examining financial strength, the debt-to-equity ratio at 3.09 raises eyebrows, and a quick ratio of 0.3 reflects short-term liquidity concerns. The company’s effort to manage liquidity through dividend suspension can be seen as a necessary but harsh move, especially with pending litigation weighing heavily on finances. For someone walking in the aisles of a Walgreens, the festive displays might belie the behind-the-scene challenges, where financial books tell a different story.

For those keeping an eye on the stock market, these financial complexities resonate through the company’s stock movements. Recent trading indicates volatility, with plunging stock prices mirroring the weight of these legal and financial troubles.

More Breaking News

Despite revenue standing at over $147B, the net income from operations seems dismal with an unsettling loss. The capitalization structure tells an even deeper story, marked by massive liabilities compared to the equity, a situation likely irked by litigation fears and high debt obligations.

Legal Hurdles and Market Sentiment

The ongoing legal woes have put Walgreens Boots Alliance under the spotlight for all the wrong reasons. The federal lawsuit by the Department of Justice sends ripples beyond the courtroom, directly impacting investor sentiment and market perception. Allegations of the company unlawfully fulfilling millions of prescriptions could lead to significant penalties, potentially affecting long-term profitability and casting shadows over Walgreens’ reputation.

This lawsuit extends beyond financial repercussions, as it touches on ethical governance questions and compliance issues that modern investors are increasingly factoring into their decisions. When the community pharmacy brand is marred by such allegations, it leaves investors unsure about future recovery, despite Walgreens’ attempts to restructure its financial footing.

Additionally, news reports suggesting faltering talks with Sycamore Partners have added fuel to the fire. Market actors react to uncertainties just as birds scatter from a sudden noise, and Walgreens’ drop in share prices reflects this sentiment better than words ever could.

Conclusion: Uncertain Road Ahead

Navigating its current trials, Walgreens Boots Alliance faces formidable challenges. While it attempts to stabilize financials by cutting dividends and debt, it still battles significant legal threats. As millionaire penny stock trader and teacher Tim Sykes says, “Consistency is key in trading; don’t let emotions dictate your trades.” Only time will tell if its measures will bring about the turnaround needed. With the market reacting to every whisper of legal, financial, or operational setback, Walgreens’ journey reflects a story still unfolding, keeping traders on their toes as they wonder if a recovery or further decline is imminent.

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”