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$WBA Gets Booted Out of the Dow: Another Blow for the Struggling Pharmacy Giant

Walgreens Boots Alliance (WBA) woke up to a pre-market drubbing on Wednesday, with shares tumbling 3% after being unceremoniously booted from the blue-chip Dow Jones Industrial Average (DJIA). This marks the end of a nearly three-year run for the drugstore chain on the prestigious index, replaced by none other than e-commerce behemoth Amazon (AMZN).

This news comes hot on the heels of Walgreens' drastic decision to slash their dividend by half back in January, a move aimed at shoring up cash for market share battles and healthcare expansion. However, it seems investors weren't impressed, with the stock losing a staggering 65% of its value since joining the Dow in 2018.

More woes for Walgreens:

  • New leadership, store closures, and a reduced dividend haven't stemmed the tide against declining sales and a slow-growing healthcare unit.

  • The stock has experienced a downward spiral for seven out of the past eight years, currently sitting nearly 15% below its 2024 starting point.

  • Compared to bigger competitor CVS Health, Walgreens trades at a significantly lower forward price-to-earnings ratio (6.54 vs. 9), reflecting investor uncertainty.

Why this matters:

The DJIA swap highlights the ever-shifting landscape of the American economy, with Amazon's inclusion reflecting the growing dominance of online retail and tech giants. For Walgreens, this removal is another symbolic blow, raising questions about its long-term viability in a rapidly evolving market.

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Disclaimer: This blog is for informational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.

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