What Happened:
Shares of coffee chain Dutch Bros (NYSE:BROS) fell 25.9% in the morning session after the company reported second-quarter earnings results. Its gross margin missed analysts' expectations, and its full-year revenue guidance slightly missed Wall Street's estimates, the latter seeming to drag shares down. On the other hand, Dutch Bros blew past analysts' EPS expectations. Its revenue also outperformed Wall Street's estimates. Zooming out, we think this was a mixed yet weaker quarter for the company given the soft guidance.
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What is the market telling us:
Dutch Bros's shares are very volatile and over the last year have had 15 moves greater than 5%. But moves this big are very rare even for Dutch Bros and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the stock gained 14.5% on the news that the company reported a 'beat and raise' quarter. Dutch Bros blew past analysts' revenue, adjusted EBITDA and EPS expectations this quarter. Notably, the topline benefited from the combination of ticket expansion and traffic, and this flowed to the bottom line. As a result, management seemed more optimistic and raised its full year guidance for revenue and adjusted EBITDA. Zooming out, we think this was an impressive quarter that should delight shareholders.
Dutch Bros is down 5.2% since the beginning of the year, and at $29.47 per share it is trading 31.2% below its 52-week high of $42.81 from July 2024. Investors who bought $1,000 worth of Dutch Bros's shares at the IPO in September 2021 would now be looking at an investment worth $803.11.
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