Stock price of Sweetgreen decreases following pre-earnings downgrade assessment
Crisp Take: Sweetgreen's shares went south today, plummeting over 6% after JPMorgan analysts gave the salad chain a cold shoulder. They stripped Sweetgreen from an "overweight" to a "neutral" rating, and slashed the price target from a piping hot $32 to just $25, cold as a cucumber. Gone are the days of that $32 target, one of the highest on the Street.
JPMorgan is fretting about demand, a surplus of restaurants, and Sweetgreen's bleak cash flow situation. They think Sweetgreen needs a serious upgrade to its value proposition, suggesting price cuts, better food portions - especially for delivery, creating affordable entry-level prices, and pumping up marketing returns.
This chilly treatment comes at a time when other fast-food joints are spilling the beans about reduced demand and pressures on the middle-income segment. Wendy's recently revealed its sales might slide this year, while McDonald's has been sounding the alarm about economic jitters filtering down. Despite Americans continuing to dish out their dough, some experts are seeing a chill in consumer sentiment.
Sweetgreen's stock has taken a beating, plummeting over 40% this year already. Financial results are on the horizon, due Thursday afternoon, and analysts expect first-quarter revenue of $164.8 million and a net loss of nearly $26 million, according to Visible Alpha.
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Trading in Sweetgreen's stocks saw a significant decline after JPMorgan downgraded the company's rating from "overweight" to "neutral" and lowered the price target, indicating potential issues in the finance sector for the salad chain. Facing concerns about demand, a surplus of restaurants, and cash flow situation, JPMorgan suggested various strategies for Sweetgreen to improve its value proposition, including price cuts, better food portions, affordable entry-level prices, and increased marketing efforts, all aimed at boosting business and investor confidence.
