Arbroath player-manager Paul Sheerin was bemused by his side’s Jeykll and Hyde performance.
At times the Lichties passed the ball around fantastically well and dominated, but in other periods they lost the place completely and looked frighteningly vulnerable at the back.
Sheerin said: “In the final 20 minutes of the first half, we were as good as we have been. For long spells, I thought we were excellent and we carried a real threat.
“But for 20 minutes in the second half we capitulated and didn’t defend well enough. We seemed to be panicking every time Stenhousemuir got a set-piece.
“We showed good character to battle back, but we gave ourselves a mountain to climb and the mountain was too high.”
Bryan Hodge drew first blood for the Warriors in the 21st minute but Arbroath hit back with a fine goal from Lee Erwin.
Stenny stunned the Lichties again at the beginning of the second period by grabbing two goals inside six minutes.
Sean Higgins was first to get on the mark with a close-range effort from a corner, and that was followed by a perfectly executed John Gemmell overhead kick, which left Scott Morrison helpless.
The game seemed to be done and dusted in the 64th minute when Sean Dickson’s drive found its way into the roof of the net despite Colin Hamilton’s desperate attempt to clear.
Hamilton got on the scoresheet at the other end shortly afterwards then sub Alan Cook scored from close range to set up a rousing finish.
Arbroath pressed for an equaliser and looked to have a strong claim for a penalty in the dying seconds when Cook tumbled in the box, but referee Des Roache was having none of it.