Shares of online fashion retailer Revolve Group (NASDAQ: RVLV) fell 5.93% in the morning session after analyst Oliver Chen of TD Cowen downgraded the stock's rating from Outperform (Buy) to Market Perform (Hold) and lowered the price target from $30 to $19.
What is the market telling us:
Revolve's shares are very volatile and over the last year have had 47 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was 19 days ago, when the stock dropped 6.25% on the news that the company reported first-quarter results that missed analysts' estimates for revenue, operating income, and free cash flow. A minor positive was that active customers grew and exceeded expectations. Management called out an "increasingly challenging macroeconomic environment that led to a deceleration in net sales momentum," which might lower the growth expectations for the coming quarter. It was a weak quarter and the near-term outlook seemed shaky. Following the results, Raymond James analyst downgraded the stock's rating from Outperform (Buy) to Market Perform (Hold).
Revolve is down 25.8% since the beginning of the year, and at $16.69 per share it is trading 48.5% below its 52-week high of $32.43 from June 2022. Investors who bought $1,000 worth of Revolve's shares at the IPO in June 2019 would now be looking at an investment worth $490.88.
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