What Happened?

A number of stocks jumped in the afternoon session after markets continued to rally as the latest inflation data reinforced expectations for a Federal Reserve rate cut as soon as September. The latest Consumer Price Index (CPI) report for July showed inflation holding steady, reinforcing market expectations that the Federal Reserve could begin cutting interest rates as soon as September. Lower interest rates generally stimulate the economy by making borrowing cheaper for consumers and businesses. This can lead to increased consumer spending and e-commerce activity, which directly benefits online retail and marketplace companies. The positive economic outlook fueled a broad-based rally, pushing the S&P 500 and Nasdaq to new record highs and lifting most growth-oriented technology stocks.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Online Retail company Revolve (NYSE: RVLV) jumped 5.7%. Is now the time to buy Revolve? Access our full analysis report here, it’s free.
• Online Marketplace company EverQuote (NASDAQ: EVER) jumped 4.1%. Is now the time to buy EverQuote? Access our full analysis report here, it’s free.
• Social Networking company Reddit (NYSE: RDDT) jumped 5.4%. Is now the time to buy Reddit? Access our full analysis report here, it’s free.
• Consumer Subscription company Coursera (NYSE: COUR) jumped 3.1%. Is now the time to buy Coursera? Access our full analysis report here, it’s free.
• Online Marketplace company The RealReal (NASDAQ: REAL) jumped 3.1%. Is now the time to buy The RealReal? Access our full analysis report here, it’s free.

Zooming In On Revolve (RVLV)

Revolve’s shares are very volatile and have had 25 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 22 days ago when the stock gained 3.3% on the news that Raymond James raised its price target on the stock and maintained an Outperform rating, citing a more favorable tariff environment. The investment firm boosted its price target on the online fashion retailer to $25 from $21, noting that potential gross margin pressure from tariffs is now expected to be "modestly less" than previously anticipated. Analysts at the firm now assume China tariffs will be 30%, a significant reduction from prior estimates that were as high as 145%. This change reduces the estimated annualized headwind from tariffs from over 700 basis points to around 400 basis points. The upgrade was made despite the firm noting slower growth and an increase in promotions during the quarter. However, Raymond James still projected Revolve would achieve a 5% year-over-year revenue increase for the second quarter, in line with consensus estimates. The positive analyst action and improved tariff outlook appeared to outweigh broader market caution, lifting shares in a sector that has been closely watching trade policy developments.

Revolve is down 34.6% since the beginning of the year, and at $21.95 per share, it is trading 43.4% below its 52-week high of $38.80 from November 2024. Investors who bought $1,000 worth of Revolve’s shares 5 years ago would now be looking at an investment worth $922.27.

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