What Happened?
Shares of discount retailer Five Below (NASDAQ: FIVE) fell 4.5% in the afternoon session amid negative sentiment in the retail sector as peer company RH reported disappointing results and cut its full-year revenue forecast.
While no company-specific news was released for Five Below, the negative report from furniture retailer RH appeared to weigh on investor sentiment across the industry. RH's results missed analyst expectations for both profit and revenue. The company also trimmed its revenue forecast for the fiscal year, with its CEO citing “the polarizing impact of tariff uncertainty and the worst housing market in almost 50 years.” These comments signal potential headwinds for consumer spending, which could affect discount retailers.
The shares closed the day at $139.88, down 4.1% from previous close.
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 Five Below? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Five Below’s shares are very volatile and have had 27 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 5.4% on the news that investors appeared to take profits following the company's recent strong second-quarter earnings report and upbeat guidance.
The discount retailer recently announced that it beat both earnings and revenue estimates for the second quarter. In a sign of strong operational momentum, Five Below also issued an optimistic outlook for the third quarter and raised its full-year 2025 expectations for earnings per share, revenue, and comparable sales. The second quarter marked a significant milestone for the company, with sales surpassing $1 billion for the first time outside of the crucial holiday season. This strong "beat-and-raise" performance, however, may have prompted a "sell-the-news" reaction from investors looking to cash in on gains following the positive announcement.
Five Below is up 41.2% since the beginning of the year, and at $139.90 per share, it is trading close to its 52-week high of $153.40 from September 2025. Investors who bought $1,000 worth of Five Below’s shares 5 years ago would now be looking at an investment worth $1,068.
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