Best Buy stock hit its worst levels since May 2024 as investors reacted to the company’s quarterly earnings report and guidance on Tuesday morning.
Shares fell more than 16% to their lows of the day on extremely heavy volume, shifting the stock into a new long-term bear market trend.
Earnings results for the latest quarter came in better than analysts’ expectations. Best Buy beat its earnings per share target of $2.40 by $0.18, the company’s best EPS numbers since the same quarter last year.
Revenue for the quarter also came in ahead of Wall Street’s expectations as the company benefitted from a strong holiday shopping season. That revenue result did reflect negative growth on a year-over-year basis as consumers continue to move to discounted and online retailers for their electronic purchases.
Investors’ disappointment surrounded the company’s outlook, including comments on the impact on tariffs. The tariffs come just as Best Buy was experiencing a long-awaited recovery in the computing and mobile phone categories, which account for approximately 44% of its total sales.
As we reported yesterday, Best Buy imports more than 95% of its products sold from China and Mexico. The newly enacted tariffs – and those expected to follow in retaliation – which will have an almost immediate effect on the company’s profitability.
Best Buy’s management expects earnings for the next quarter to return to negative territory, being "slightly down versus last year".
Today’s sharp decline in share price moves Best Buy stock into a new long-term bear market trend.
The stock’s close below its 20-month moving average is its first since May of 2024, but resembles the shift into a bear market in early 2022 very closely. That bear market resulted in a drop of 38% from Best Buy stock over a ten-month period.
Investors looking for any technical support should keep an eye on the $75 price mark. This price acted as intraday support on Tuesday and should be seen as a potential trigger for continued selling if breached.
From a long-term perspective, the new bear market trend will first target the $70 price level followed by another round lower to a possible target of $60.
