What Happened?
A number of stocks fell in the afternoon session after President Trump criticized the Federal Reserve's approach to interest rate cuts, warning that the pace was slow and could hinder economic growth. Trump's comments added pressure to an already sensitive market, raising concerns about political interference in monetary policy.
Meanwhile, Fed Chair Jerome Powell maintained a cautious stance the previous week, highlighting the difficulty of balancing the dual mandate of steady employment and price stability amid the escalating trade tension. Investor sentiment was further dampened by the absence of constructive progress in trade negotiations, especially US-China relations which took a turn for the worse in the previous week.
Overall, the outlook seemed more unclear heading into the first quarter 2025 earnings season, as a combination of hard to predict monetary policy and unresolved trade tensions weighed on business confidence.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, following stocks were impacted:
- Social Networking company Nextdoor (NYSE: KIND) fell 6.3%. Is now the time to buy Nextdoor? Access our full analysis report here, it’s free.
- Consumer Electronics company GoPro (NASDAQ: GPRO) fell 8%. Is now the time to buy GoPro? Access our full analysis report here, it’s free.
- Online Marketplace company EverQuote (NASDAQ: EVER) fell 7.3%. Is now the time to buy EverQuote? Access our full analysis report here, it’s free.
- Apparel Retailer company Torrid (NYSE: CURV) fell 9.1%. Is now the time to buy Torrid? Access our full analysis report here, it’s free.
- Modern Fast Food company Chipotle (NYSE: CMG) fell 5.4%. Is now the time to buy Chipotle? Access our full analysis report here, it’s free.
Zooming In On Torrid (CURV)
Torrid’s shares are extremely volatile and have had 55 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 biggest move we wrote about over the last year was 5 months ago when the stock dropped 33.9% on the news that the company reported weak third-quarter 2024 results, which missed analysts' revenue and EBITDA expectations. Its full-year revenue and EBITDA guidance also fell short of Wall Street's estimates. The company observed soft sales trends in late September, which continued through October. Macroeconomic pressures, such as constrained consumer spending and adverse weather events, also created a difficult operating environment.
Looking ahead, management emphasized the need for more innovative and diversified product strategies to adapt to shifting consumer preferences. Overall, this was a weaker quarter.
Torrid is down 4.6% since the beginning of the year, and at $5.04 per share, it is trading 43.7% below its 52-week high of $8.95 from July 2024. Investors who bought $1,000 worth of Torrid’s shares at the IPO in June 2021 would now be looking at an investment worth $208.49.
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