Shares of Krispy Kreme ( DNUT ) have fallen about 20% recently, extending their year-to-date losses to about 65% and hitting a new low since its 2021 IPO. A series of negative news has hit the stock hard, with shares trading around $3.50 per share this morning.
The company’s sales fell year-over-year in the latest quarter, and its net loss widened, while its second-quarter revenue forecast (at the midpoint of the range) was below the current Visible Alpha average.
Other news from the company further exacerbated the situation: Krispy Kreme announced that it would suspend its dividend, citing a desire for “greater financial flexibility,” and said it plans to stop supplying its products to more McDonald’s ( MCD ) restaurants “while working to achieve a profitable business model for all parties.” Its shares soared when the news of the partnership was announced more than a year ago.
“To become an even bigger Krispy Kreme, we have to be better, and we are taking swift and decisive action to pay down debt, reduce balance sheet leverage, and drive sustainable earnings growth,” CEO Josh Charlesworth said in a statement.
Currently, Wall Street analysts are generally bullish on the stock. The average price target is above $8, nearly 90% above Wednesday’s closing price. However, after today’s events, some analysts may re-evaluate the stock.
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