Why Five Below (FIVE) Stock Is Nosediving

What Happened?

Shares of discount retailer Five Below (NASDAQ:FIVE) fell 5.4% in the morning session after investors appeared to take profits following the company's recent strong second-quarter earnings report and upbeat guidance. The discount retailer recently announced that it beat both earnings and revenue estimates for the second quarter. In a sign of strong operational momentum, Five Below also issued an optimistic outlook for the third quarter and raised its full-year 2025 expectations for earnings per share, revenue, and comparable sales. The second quarter marked a significant milestone for the company, with sales surpassing $1 billion for the first time outside of the crucial holiday season. This strong "beat-and-raise" performance, however, may have prompted a "sell-the-news" reaction from investors looking to cash in on gains following the positive announcement.

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What Is The Market Telling Us

Five Below’s shares are very volatile and have had 27 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 12 days ago when the stock gained 3.2% on the news that the company reported strong second-quarter financial results that surpassed expectations and raised its full-year guidance. The discount retailer announced second-quarter sales surged 23.7% year-on-year to $1.03 billion, with comparable sales—a key metric for retailers—jumping 12.4%. Adjusted earnings per share came in at $0.81, significantly beating the consensus estimate of $0.63. Citing the robust momentum, Five Below also boosted its full-year guidance. Management now expects full-year revenue to be $4.48 billion and adjusted earnings to be $4.96 per share at the midpoints of their new forecast ranges. Overall, the company delivered a strong quarter by beating expectations on key metrics and providing an optimistic outlook.

Five Below is up 43.5% since the beginning of the year, and at $142.16 per share, it is trading close to its 52-week high of $153.40 from September 2025. Investors who bought $1,000 worth of Five Below’s shares 5 years ago would now be looking at an investment worth $1,135.

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