Revolve stock plunges on concerns about decelerating growth

Revolve Group Inc. shares plunged 23.7% in Wednesday trading as fears mount about the company's decelerating growth. Revolve, which targets a millennial and Gen Z shopper, reported first-quarter net income of $22.6 million, or 30 cents per share, up from $22.3 million, or 30 cents per share, last year. Sales of $283.5 million were up from $178.9 million. The FactSet consensus was for EPS of 27 cents and sales of $256.2 million. Total active customers rose 38% and average order value reached $288, up from $256 last year. But there are concerns that the good news won't last. "[W]e're really pleased with the active customer growth this quarter, again, after several quarters of really robust growth. That said, we have commented in the past that that active customer growth number will start to come down as we kind of cycle out of the COVID periods of past and that active customer growth will converge closer to net sales growth," said Jesse Timmermans, chief financial officer, on the late Tuesday earnings call, according to a FactSet transcript. Wedbush analysts maintained their outperform stock rating but cut the price target to $59 from $68. "While 'slowing growth' retailers tend to have a tough time in the market (as Revolve and their shareholders are unfortunately learning), ultimately, we believe the business has compelling growth prospects in the near-term (return to in-person social events) and over the long-term (current customer count only ~3% of the target demographic)." Revolve stock is down nearly 41% for the year to date.

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