What Happened?

Shares of diner restaurant chain Denny’s (NASDAQ: DENN) fell 3% in the afternoon session after a lack of fresh catalysts allowed underlying investor concerns to take the forefront. The decline occurred in the absence of any specific company announcements or analyst rating changes. However, recent data indicates a rise in negative sentiment among investors. The percentage of the company's shares sold short, a common measure of bearish bets against a stock, has recently increased. This move comes amid lingering worries over the company's performance. Earlier in the year, Denny's management issued weak guidance for fiscal year 2025, projecting same-store sales to be anywhere from flat to down 2%. Analysts have also pointed to a challenging outlook, with the company facing declining system-wide same-restaurant sales and downward revisions to earnings estimates. Without positive news to change the narrative, these persistent concerns appear to be weighing on the stock.

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What Is The Market Telling Us

Denny’s shares are extremely volatile and have had 37 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

Denny's is down 35.3% since the beginning of the year, and at $4.06 per share, it is trading 47% below its 52-week high of $7.65 from July 2024. Investors who bought $1,000 worth of Denny’s shares 5 years ago would now be looking at an investment worth $500.

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