Shares of Chewy (CHWY) are taking it on the chin, falling about 5% to $28.70 in Wednesday trading.
The move comes after the company missed on second-quarter earnings estimates, but beat on revenue.
A loss of 21 cents per share missed estimates by 10 cents per share, while revenue of $1.15 billion surged more than 42% year-over-year and beat estimates by $20 million.
However, Chewy stock is paring much of its morning losses as investors dig through the numbers. Indeed, the company reported very strong revenue growth and showed a notable expansion in margins. Further, EBITDA came in ahead of expectations, too.
That's led to a rebound off the session lows, as Chewy stock was down to $27.79 at one point. That also marks new post-IPO lows for Chewy since going public at $22 per share in June.
With the move to new lows, it marks a notable violation on the charts. Let's take a closer look.
Trading Chewy Stock
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However, despite the solid growth in Chewy's latest quarter, investors sent shares lower. In doing so, CHWY stock broke below range support between $29 and $29.50, as well as the 61.8% retracement at $29.42 (when measuring down to the IPO price).
So why does this look attractive on the long side? To be frank, it doesn't -- at least not yet.
For bulls to take a bite out of Chewy stock, they'll need to see it reclaim the 61.8% retracement and the $29.50 level. Above that, it could hit downtrend resistance (blue line), but will have at least rallied hard off its new lows and then reclaimed a key area of support.
It's not fully out of the woods in that event, as it still has the 20-day and 50-day moving averages overhead as well as that downtrend resistance mark we mentioned, but it would be an important development.
Something else to watch? If Chewy stock finds the $29 to $29.50 area to be resistance, then shares could be in for more downside. A break below Wednesday's low would signal that more losses are on the way.
In short, see if CHWY stock can reclaim the $29.50 mark.