Chagee Holdings (CHA) Plunges 11.6%: A Bearish Storm Amidst Global Expansion Hopes

Summary
• Chagee Holdings (CHA) trades at $10.788, down 11.6% from its previous close of $12.21
• Intraday range spans $10.26 (52W low) to $11.25
• Q2 2025 earnings missed estimates, with EPS at $0.05 vs. $0.09 expected

Chagee Holdings (CHA) is under pressure as a sharp intraday selloff erodes 11.6% of its value, trading near its 52-week low of $10.26. The move follows a Q2 earnings report that fell short of expectations, with revenue and EPS both lagging. Meanwhile, the company’s aggressive global expansion into North America—highlighted by its first U.S. stores—has yet to translate into investor confidence. With technical indicators pointing to a bearish trend and sector peers like Starbucks (SBUX) showing modest resilience, the path forward for CHA remains fraught with uncertainty.

Earnings Disappointment and Revenue Shortfall Spark Sell-Off
Chagee’s Q2 2025 earnings report, released on August 29, 2025, triggered the selloff. The company reported EPS of $0.05, missing the $0.09 consensus estimate by $0.04. Revenue of $465.11 million also fell short of the $484.14 million forecast. The earnings miss, coupled with weak revenue growth, signaled underperformance in its core markets and raised concerns about the sustainability of its rapid expansion. Despite a 734.3% GMV increase in 2024, the recent results suggest operational challenges, including supply chain bottlenecks and intensifying competition in China’s crowded tea market. The stock’s decline reflects a loss of investor confidence in its ability to scale profitably.

Restaurants Sector Mixed as Starbucks (SBUX) Gains Ground
The Restaurants sector, led by Starbucks (SBUX), has shown relative resilience, with SBUX’s intraday price up 0.28%. While Chagee’s earnings miss dragged its shares lower, Starbucks’ recent focus on repositioning as a neighborhood coffeehouse has stabilized its performance. However, Chagee’s struggles highlight sector-wide challenges, including rising input costs and shifting consumer preferences. Unlike Starbucks, which benefits from a global brand legacy, Chagee’s rapid international expansion into North America remains unproven, creating a stark contrast in investor sentiment.

Bearish Technicals and ETF Positioning for CHA
• RSI: 23.39 (oversold)
• MACD: -0.698 (bearish divergence)
• Bollinger Bands: $11.48 (lower band) vs. current $10.788 (near support)
• 30D MA: $13.97 (price below average)

Chagee’s technicals paint a bleak picture. The RSI at 23.39 suggests extreme oversold conditions, but this often signals a potential rebound rather than a bottom. The MACD’s negative value and bearish histogram confirm downward momentum. With the stock trading near its 52W low and below the 30D MA, the short-term outlook remains bearish. Investors should monitor the $10.26 level (52W low) as a critical support. For ETF positioning, consider XLF (Financial Select Sector SPDR) as a proxy for sector rotation, though CHA’s lack of leverage ETFs complicates direct hedging. No options are available for analysis, but a bearish play could involve short-term puts if liquidity emerges.

Backtest Chagee Holdings Stock Performance
The backtest of CHA's performance after an intraday plunge of -12% from 2022 to the present reveals a mixed outlook. While the ETF has experienced some recovery, the overall trend has been negative, with a maximum return of only -0.29% over a 30-day period. The 3-day and 10-day win rates are both at 31.68%, indicating that the ETF has had occasional short-term gains, but these are not consistently translating into longer-term positive returns.

Chase the Rebound or Ride the Bear? Key Levels to Watch
Chagee’s 11.6% intraday drop has pushed it to a critical juncture. While the stock’s technicals suggest a potential bounce off the $10.26 support, the earnings miss and operational headwinds cast doubt on a sustained recovery. Investors should prioritize risk management, using the $10.26 level as a sell trigger if broken. Meanwhile, the sector leader Starbucks (SBUX) offers a contrast, with its 0.28% gain underscoring the importance of brand resilience. For CHA, the next catalyst—its Q3 2025 earnings on November 28—could determine whether this selloff is a buying opportunity or a warning sign. Watch for a breakdown below $10.26 or a positive earnings surprise to dictate next steps.