Revolve Group (RVLV) Plunges 9.87% Amid Tariff Pressures, Lowest Since July 2024

Revolve Group (RVLV) shares plummeted 9.87% today, marking the third consecutive day of decline, with a cumulative drop of 12.60% over the past three days. The stock price fell to its lowest level since July 2024, experiencing an intraday decline of 11.30%.

The strategy of buying RVLV shares after they reached a recent low and holding for one week resulted in poor performance over the past five years. The strategy yielded a total return of -14.57%, with a benchmark return of 41.68% and an excess return of -56.25%. The Sharpe ratio was -0.11, indicating significant risk, with a maximum drawdown of -59.52% and a volatility of 58.75%.

Revolve Group's recent stock performance has been influenced by several key factors. The company's management decided to reduce its gross margin, partly due to the impact of tariffs, which has contributed to the stock's decline. This decision reflects the broader challenges faced by the company in navigating the current economic landscape.

Analysts have also adjusted their price targets for Revolve Group, with BofA lowering its target from $25 to $20 and Roth Capital from $25 to $19. These adjustments underscore the cautious sentiment surrounding the company, driven by tariff pressures and slowing consumer sentiment. The company's Q1 2025 earnings call further highlighted macroeconomic challenges, including geopolitical uncertainty and significant tariffs impacting the sector.

Despite meeting revenue expectations in Q1 2025 with a 9.7% year-on-year increase, Revolve Group's revenue still missed some estimates. This discrepancy led to an 8.1% drop in share value in after-hours trading, reflecting investor concerns about the company's ability to sustain growth in the face of ongoing challenges. The combination of these factors has created a challenging environment for Revolve Group, as it seeks to navigate the complexities of the current market conditions.