Why Red Robin (RRGB) Shares Are Falling Today

Kayode Omotosho /
2024/02/29 12:28 pm EST

What Happened:

Shares of burger restaurant chain Red Robin (NASDAQ:RRGB) fell 15.5% in the pre-market session after the company reported fourth-quarter results with same-store sales falling below expectations, though revenue beat. In addition, its EPS missed, and its full-year revenue guidance was below Wall Street's estimates. The discontinuation of virtual brands (due to weak profits) introduced in 2020 is expected to be a headwind to topline growth until Q3'2024. The company also attributed some of the weaknesses to removing "deep discounting marketing programs." However, taken together, these changes should drive profitability in the near term. Overall, this was a mediocre quarter for Red Robin.

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What is the market telling us:

Red Robin's shares are very volatile and over the last year have had 34 moves greater than 5%. But moves this big are very rare even for Red Robin and that is indicating to us that this news had a significant impact on the market's perception of the business.

Red Robin is down 34.1% since the beginning of the year, and at $7.80 per share it is trading 50.1% below its 52-week high of $15.63 from April 2023. Investors who bought $1,000 worth of Red Robin's shares 5 years ago would now be looking at an investment worth $256.49.

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