Republic Services Plunges 4.14% – What’s Behind the Sharp Decline Amid Strong Earnings?

Summary
• Current price: $235.82, down 4.14% from $246.01 previous close
• 52-week high: $258.75; 200-day MA: $228.31 (below current price)
• Dividend hike: +8% to $0.625/share, payable Oct. 15

Republic Services (RSG) is trading near its intraday low of $235.66 amid a sharp selloff despite reporting robust Q2 earnings, including 100 bps of EBITDA margin expansion and a $1.42 billion free cash flow. The stock’s 4.14% decline has traders questioning whether the bearish move reflects technical exhaustion or a shift in sentiment. With the 200-day MA at $228.31 and Bollinger Bands tightening, the market is testing whether this earnings-driven rally has legs or if the sector’s mixed performance will drag shares lower.

Earnings Optimism Clashes with Technical Deterioration
Republic Services’ 4.14% intraday drop reflects a clash between bullish fundamentals and bearish technical signals. While the company reported record EBITDA of $1.36 billion, a 100 bps margin expansion, and $1.42 billion in free cash flow, the stock’s price action suggests waning momentum. The 52-week high of $258.75 remains a distant target, and the 200-day MA at $228.31 now looms as a critical support level. MACD (-0.61) and a bearish RSI (62.08) indicate a potential shift in sentiment, exacerbated by the stock’s failure to hold above its 30D MA ($243.78). Meanwhile, the options market shows heightened volatility, with leveraged put options like RSG20250815P220 attracting attention as traders hedge against further declines.

Waste Management Sector Mixed as RSG Struggles
The Waste Management sector, led by Waste Management (WM) with a 0.03% intraday gain, shows mixed momentum. While RSG’s earnings outperformed, the broader sector’s fragmented performance—driven by labor disruptions and margin pressures—highlights sector-wide challenges. RSG’s 4.14% drop contrasts with peers like Waste Connections, which reaffirmed its full-year outlook, suggesting RSG’s decline may reflect specific technical factors rather than a broad sector selloff.

Bearish Plays and Key Technical Levels to Watch
• 200-day MA: $228.31 (below current price)
• RSI: 62.08 (neutral to bearish)
• MACD: -0.61 (bearish divergence)
• Bollinger Bands: Upper ($246.34), Middle ($241.92), Lower ($237.51)

Key levels to monitor include the 200-day MA at $228.31 and the Bollinger Band lower bound at $237.51. A break below $235.66 (intraday low) could trigger a test of $220 support. For aggressive bearish positions, consider RSG20250815P220 (put, $220 strike, 8/15 exp) with 462.35% leverage and 24.62% IV. Alternatively, RSG20250919P220 (put, $220 strike, 9/19 exp) offers 134.74% leverage with 21.28% IV. Both contracts show high gamma and theta, ideal for short-term volatility. A 5% downside to $224.03 would yield $16.03 profit for RSG20250815P220, assuming a $220 strike. Aggressive bulls may consider a bounce above $241.92, but bearish options currently dominate the risk-reward profile.

Backtest Republic Services Stock Performance
The backtest of Realty Income Corporation (RSG) after an intraday plunge of -4% shows favorable performance metrics. The 3-Day win rate is 58.69%, the 10-Day win rate is 62.93%, and the 30-Day win rate is 67.76%, indicating a higher probability of positive returns in the short term following the event. The maximum return during the backtest period was 5.36%, which occurred on day 59, suggesting that RSG can generate gains even after a significant intraday decline.

Position for a Test of $220 Support – Watch for Sector Divergence
The selloff in RSG reflects a technical breakdown despite strong earnings, with the 200-day MA at $228.31 and $220 support level becoming critical. Traders should watch for a breakdown below $235.66 and consider bearish options like RSG20250815P220 for leveraged exposure. Meanwhile, the sector leader Waste Management (WM) is up 0.03%, suggesting RSG’s decline may be idiosyncratic. A sustained move above $241.92 could reignite bullish momentum, but for now, the path of least resistance is down. Investors should prioritize liquidity and volatility management, given the stock’s proximity to key technical thresholds.