411341

Why Sportsman's Warehouse (SPWH) Shares Are Getting Obliterated Today


Radek Strnad /
2024/06/05 12:08 pm EDT

What Happened:

Shares of outdoor specialty retailer Sportsman's Warehouse (NASDAQ:SPWH) fell 12.9% in the pre-market session after the company reported first-quarter results that missed analysts' revenue, operating income, gross margin, and EPS estimates. It primarily attributed the weak topline result to "consumer inflationary pressures and decreasing discretionary spending." Despite the challenges, it was reassuring that management reaffirmed full-year revenue and adjusted EBITDA guidance, showing conviction in its ability to execute to meet its set goals. Overall, it was a weaker quarter for the company, given the macro challenges.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Sportsman's Warehouse? Access our full analysis report here, it's free.

What is the market telling us:

Sportsman's Warehouse's shares are a little volatile and over the last year have had 42 moves greater than 5%. Moves this big are very rare for Sportsman's Warehouse and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The previous big move we wrote about was 2 days ago, when the company gained 14.3% on the news that Roth Capital Partners analyst Matt Koranda initiated coverage on the stock and assigned a Buy rating with a $5 price target. The price target implied a potential 15% upside from where shares traded when the coverage was initiated. The analyst called out SPWH's "attractive position in the large shooting sports market" and believes the company is "turning the corner on cyclical headwinds and balance sheet erosion that have weighed on the stock."

Sportsman's Warehouse is down 27% since the beginning of the year, and at $3.26 per share it is trading 48.3% below its 52-week high of $6.30 from August 2023. Investors who bought $1,000 worth of Sportsman's Warehouse's shares 5 years ago would now be looking at an investment worth $909.22.

Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.