Home Depot Shares Plummet Ahead of Q2 Earnings as Options Market Predicts Decline

Home Depot (HD) shares have been under pressure ahead of its Q2 earnings release on August 18. Despite a consensus estimate of $4.71 in earnings per share, representing a marginal 0.64% increase year-over-year, investors are bailing on the stock. The options market suggests that bears have taken control, with put volume exceeding call volume by a significant margin.

The technical setup also indicates a bearish skew, with Home Depot crashing below its 20-day moving average on Monday. This signals potential for a decline in HD shares to under $350 by the end of this week. The cautious options market sentiment reflects growing concerns over persistent macro headwinds impacting consumer spending.

The higher mortgage rates and subdued housing market are choking home turnover, weighing on demand for big-ticket remodeling and DIY projects. Consumers are prioritizing smaller repairs over major renovations, limiting Home Depot's top-line momentum. Additionally, profitability could face pressure due to rising labor costs and integration expenses tied to recent acquisitions.