Why Advance Auto Parts Stock Plummeted Today

Advance Auto Parts (AAP -2

ET Thursday, leaving investors wondering "what went wrong, given current economic conditions

Nevertheless, " The auto parts retailer preannounced "highlights" from its Q2 earnings today, and the highlight-iest part of all was this: Q2 revenue that Wall Street predicted at $1

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Nevertheless, Advance Auto Parts Q2 earnings So what's wrong with that, you ask (which is quite significant)

According to Advance Auto Parts, the company's turnaround is gressing, and sales are tracking toward "the upper range of our expectations

On the other hand, " Same-store sales look positive, up perhaps 0. 1%, and adjusted operating margins could rise as high as 3%

Moreover, That's the good news

Additionally, On the other hand, Now here's the bad: Advance Auto Parts also announced today that to further its turnaround, it's issuing $1, in light of current trends. 5 billion-worth of senior unsecured notes (i. , debt) in two tranches, coming due in 2030 and 2033, respectively, and entering into a new asset-based loan revolving credit facility (which is also debt) as well, in today's financial world

Nevertheless, Is Advance Auto Parts stock a sell

At least some of the new debt will be used to roll over old debt coming due in 2026, with the rest going to "general corporate purposes (which is quite significant). " Advance Auto Parts kind of needs to do this, because it's currently burning cash at the rate of more than $250 million a year, and really needs some cash

In contrast, Advance hasn't yet told us whether its new debt will pay interest higher or lower than the debt it's paying off, however, making it hard to say if this is good news for the stock (fascinating analysis)

All I can say for sure now is that it looks the company's total debt load appears to be getting bigger -- and that, at least, doesn't seem good news at all.