What Happened?
Shares of doughnut chain Krispy Kreme (NASDAQ: DNUT) jumped 2.6% in the afternoon session after the stock's positive momentum continued as Morgan Stanley highlighted the company as a top performer in the restaurant sector, and news emerged of a major sponsorship deal with NASCAR.
In a note, the investment bank stated that Krispy Kreme outperformed most of its US restaurant peers during the third quarter, even as the overall industry softened. This commentary suggested the company was successfully navigating a challenging market. Adding to the positive sentiment, reports indicated that Krispy Kreme, along with Procter and Gamble's Tide, would step in as headline sponsors for the 2025 NASCAR season. Such a high-profile partnership was expected to boost brand visibility.
After the initial pop the shares cooled down to $3.34, up 2.6% from previous close.
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What Is The Market Telling Us
Krispy Kreme’s shares are extremely volatile and have had 39 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 previous big move we wrote about was 11 days ago when the stock dropped 4.2% on the news that President Donald Trump threatened to impose "massive" tariffs on Chinese products, reigniting trade war fears. The unexpected social media post was a stated countermeasure to Beijing's recent announcement of new export controls on rare-earth minerals. These minerals are critical components for manufacturing everything from consumer electronics to jet engines, and the news jolted a previously calm Wall Street. The renewed fears of a trade war sent all major indices into negative territory. The tech-heavy Nasdaq Composite saw the steepest decline, falling 1.7%, as investors weighed the potential impact of supply chain disruptions for key manufacturing components.
Krispy Kreme is down 65.7% since the beginning of the year, and at $3.34 per share, it is trading 73.1% below its 52-week high of $12.42 from November 2024. Investors who bought $1,000 worth of Krispy Kreme’s shares at the IPO in June 2021 would now be looking at an investment worth $158.99.
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