What Happened?
Shares of mediterranean fast-casual restaurant chain CAVA (NYSE: CAVA) jumped 2.9% in the morning session after the company was placed on an "upside 90-day catalyst watch" amid expectations that the U.S. government's reopening would positively influence sales. This outlook was supported by the company's strong performance in the fiscal third quarter of 2025. During that period, CAVA reported a 20% year-over-year increase in revenue and a 1.9% growth in same-restaurant sales. The company also expanded its footprint by opening 17 new locations, demonstrating its continued growth. The positive catalyst watch was specifically linked to an expected increase in sales around the Washington D.C. area following the reopening.
After the initial pop the shares cooled down to $52.23, up 2.4% from previous close.
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What Is The Market Telling Us
CAVA’s shares are extremely volatile and have had 32 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.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 16.9% on the news that the company reported mixed second-quarter results and provided a full-year EBITDA forecast that fell short of Wall Street's expectations. The sharp decline occurred despite the company beating second-quarter profit expectations, as investors focused on signs of slowing demand. For the quarter, CAVA missed revenue estimates, and its same-store sales growth of 2.1% also fell short of expectations. This marked a significant deceleration from the 14.4% growth seen in the same quarter of the prior year. Looking ahead, the company's full-year adjusted EBITDA guidance of $155.5 million at the midpoint was below analyst forecasts of $159.1 million. The combination of slowing growth at existing restaurants and a weaker-than-anticipated outlook for profitability weighed heavily on investor sentiment.
CAVA is down 54.7% since the beginning of the year, and at $52.23 per share, it is trading 65.4% below its 52-week high of $150.88 from December 2024. Investors who bought $1,000 worth of CAVA’s shares at the IPO in June 2023 would now be looking at an investment worth $1,193.
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