Advance Auto Parts (AAP) After Earnings: A Deeper Dive and Day-Trading Playbook

Advance Auto Parts posted an EPS beat but guided 2025 lower as interest expense rises following a $1.95B notes offering. The stock’s third straight double-digit post-earnings move makes AAP a prime event-driven trading vehicle. Below: the why behind the selloff—and a concrete intraday plan for exploiting the volatility.

Advance Auto Parts earnings day trading setup

What actually happened (and why it mattered)

• Beat on the quarter: Adjusted EPS of $0.69 vs. ~$0.56–0.59 expected; comps up +0.1%.
• But guidance cut: 2025 adjusted EPS lowered to $1.20–$2.20 (from $1.50–$2.50) primarily on higher net interest expense after issuing $1.95B in senior notes and putting in place a new $1B ABL facility.
• Price reaction: Shares dropped ~15% to the low $52s, marking a third consecutive double-digit move on an earnings day; in May, the stock surged ~57% on a beat + reaffirmed outlook.
• Relative backdrop: AAP continues to trail better-executing peers (AZO, ORLY) that showed much smaller moves on the day.

Why this keeps happening: the volatility loop

AAP has become an earnings-day volatility magnet: investors crowd into “beat” narratives, only to refocus on guidance, leverage, and competitive positioning the moment the release hits. That reflex produces significant gaps and trend days, which then attract short-term traders, reinforcing the pattern into the next print.

Day-trading AAP on earnings day: a precise playbook

1) Pre-market prep (15–30 minutes before the open)

• Mark the gap structure: Note prior close, pre-market high/low, and any gap-fill zones. On 8/14 the stock gapped down, with indications around open ≈ $54 and early prints into the low $52s; prior close ≈ $61.8 (gap size ≈ −12–16%).
• Anchor VWAPs: Set one from the earnings headline timestamp (reaction VWAP), and another from pre-market session start. These are your dynamic “truth” lines for mean-reversion vs. trend-continuation reads.
• Plot magnets: Whole/half dollars near price ($50 / $52.50 / $55) and the prior day’s low. Expect liquidity games around these levels.
• Scan options tape: Watch 0DTE/weekly puts near the money (delta −0.30 to −0.45) for momentum confirms on breakdown; a sudden skew flip or heavy call sweeping into the ORH is your early reversal tell.

2) At the bell: Opening Range and first 15 minutes

• Opening Range Break (ORB): Define a 1–5 minute OR. Short the OR low break only if price is below both anchored VWAPs and cumulative delta is making new lows; target the next whole-number magnet with a 1R first scale.
• Failed Reclaim setup: If price pops to the pre-market low or reacts to aVWAP and fails, lean short against that level with tight risk (0.5–0.7R), aiming for an OR retest/flush.
• Reversal (fade-the-gap): If buyers reclaim the pre-market low and hold above the reaction aVWAP for 3–5 bars (1–3 min bars), take a long with a stop back inside the VWAP, scale at half the gap, and run to the prior intraday supply.

3) Mid-morning tells (9:50–10:30 ET)

• VWAP Pin vs. Trend: AAP often “pins” to aVWAP after the first impulse. Holding below both aVWAPs with lower-highs → continuation short bias; reclaim + higher-lows → squeeze risk, switch to buy-the-dip into aVWAP.
• Liquidity flips: Watch the book at whole numbers. If stacked bids appear at, say, $52.00 after a flush, a spring/absorption long is viable back to VWAP with tight risk.
• Sector & peers: If AZO/ORLY are firm while AAP lags, continuation shorts are cleaner; if the group turns up in unison, favor the squeeze/reversal setup.

4) Concrete trade templates

5) Risk, sizing, and review

• Risk per idea: 0.25–0.5% of equity; stagger entries only if aVWAP context remains intact.
• Execution guardrails: No revenge trades; if stopped twice on the same idea, wait for aVWAP regime change (reclaim or rejection) before re-engaging.
• Post-trade note: Tag whether the day evolved into trend or pin-to-VWAP. AAP has shown both on recent earnings days; your plan should branch accordingly.

Deeper fundamentals to keep in mind (even for day traders)

• Leverage & interest: The $1.95B notes and new ABL facility increase fixed charges; guidance cut ties directly to interest expense. That’s why rallies to resistance can exhaust quickly—fundamental sellers use strength to de-risk.
• Peer spread: AZO/ORLY typically command premium multiples for execution. If those tickers are green while AAP is heavy, short continuation setups have higher odds.
• Event cadence: AAP has logged three straight double-digit earnings-day moves. Expect option makers to price rich implieds; consider debit structures or defined-risk entries if trading options intraday.