PetMed Express, Inc. (PETS) shares fell more than 10% during pre-market trading after the company reported worse-than-expected first quarter financial results. Revenue fell 8.5% to $80 million, missing consensus estimates by $5.8 million, and net income fell to 26 cents per share, missing consensus estimates by 16 cents per share. The company also declared a quarterly dividend of 27 cents per share that was in line with expectations.

President and CEO Menderes Akdag said that increasing online competition and aggressive pricing in the market forced the company to reduce its prices. Cash from operations was also negatively affected by an $8.8 million increase in inventory due to cost-advantaged inventory buys. Management's long-term focus is on improving its marketing and establishing direct purchasing relationships with major manufacturers.

Earlier this month, Craig-Hallum analyst Kevin Illich suggested that an 8-K filing could hint at the exploration of strategic alternatives. CEO Akdag's employment agreement was amended to add language "for Good Reason" to the "Change in Control" section, which could indicate that the company may be open to exploring alternatives, including a sale of the company. However, the analyst doesn't believe that anything is imminent.

Chart showing the share price performance of PetMed Express, Inc. (PETS)

From a technical standpoint, PetMed stock is trading down more than 60% from its 52-week highs of $41.45 and near its 52-week low of $15.00. The relative strength index (RSI) continues to trade at neutral levels with a reading of 44.78, but the moving average convergence divergence (MACD) is starting to lose some of its recent momentum. These indicators suggest that a lot of indecision remains in the market.

Traders should watch for a retest of 52-week lows of $15.00 over the coming sessions. If the stock breaks down from these levels, traders could see a move to fresh lows that haven't been seen since 2014. If the stock rebounds from these levels, traders should watch for a move toward reaction highs and the 50-day moving average at $17.11.

The author holds no position in the stock(s) mentioned except through passively managed index funds.