Why Five Below (FIVE) Stock Is Nosediving

Petr Huřťák /
2024/06/06 11:09 am EDT

What Happened:

Shares of discount retailer Five Below (NASDAQ:FIVE) fell 20.2% in the pre-market session after the company reported first quarter earnings results. Its full-year revenue and earnings guidance both missed analysts' expectations and were lowered from the previous outlook. Like some retailers that reported earnings during the season, the company called out a challenging macro environment that "disproportionately impacted core lower-income customers." Overall, the results could have been better.

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What is the market telling us:

Five Below's shares are not very volatile than the market average and over the last year have had only 6 moves greater than 5%. Moves this big are very rare for Five Below and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 3 months ago, when the stock dropped 15.7% on the news that the company reported fourth-quarter results with revenue and EPS slightly missing analysts' estimates, but most importantly, its full-year 2024 revenue and earnings guidance fell short. Investors likely punished the stock for its weak outlook.

Five Below is down 45.8% since the beginning of the year, and at $116.82 per share it is trading 45.8% below its 52-week high of $215.51 from January 2024. Investors who bought $1,000 worth of Five Below's shares 5 years ago would now be looking at an investment worth $958.21.

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