By Barrie Einarson | Trade Ideas

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Today’s edition of “What Makes This Trade Great” looks at BBW — an earnings play that turned into a strong short. To Subscribe to Trade Ideas: https://go.trade-ideas.com/SHQ
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The Setup

This was an earnings play from the start. The drop was visible in the pre-market, with the stock falling from around $39 down to $33. A move like that can make it tempting to think the trade is already over — why keep watching a stock that’s fallen this far?

Why It Kept Falling

Because the news kept piling on. Along with the earnings miss, the company let go of a senior sales executive tied to a product launch that underperformed over the summer, and also dissolved its relationship with Walmart. That combination was more than enough to keep sellers in control.

The Move

Entry didn’t come right at the top of the move — more around the middle of the decline. But once in, the plan was simple: stay short and ride the trend down as long as it kept working, rather than trying to guess a bottom.

The Takeaway

BBW is a good reminder that earnings plays aren’t just about the initial gap — follow-through news like management changes and lost partnerships can keep a stock trending in one direction well after the open. Sticking with the trend instead of fighting it was the right call here.

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Trade Ideas’ AI-driven alerts can help surface earnings-related setups like this one. As always, past performance on any single trade doesn’t guarantee future results, and shorting stocks carries additional risk — manage your risk accordingly.