What Happened?
Shares of coffee chain Dutch Bros (NYSE: BROS) rose in the afternoon session after investors reacted to positive comments from CNBC's Jim Cramer, who endorsed the stock as a buying opportunity. During a segment on his show, Cramer responded to a caller's question about the company's prospects. He stated that the stock's recent decline had created a chance for investors to buy in. Cramer described Dutch Bros as a growth company that was expanding from a regional to a national brand. While he mentioned the stock's high price-to-earnings multiple, he felt it could be bought at its current price, framing his view as a long-term play for investors.
After the initial pop the shares cooled down to $53.83, up 1.7% from previous close.
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What Is The Market Telling Us
Dutch Bros’s shares are extremely volatile and have had 30 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 11 months ago when the stock gained 40.3% on the news that the company reported a "beat and raise" quarter, which suggests that its recent sales optimization efforts are resonating with customers. Dutch Bros delivered strong third-quarter earnings, which blew past analysts' revenue and EBITDA expectations as same-shop transaction growth improved. This shows profitable growth. The company is engaging customers by introducing new menus, such as seasonal beverages like the Cookie Butter Latte. The rollout of mobile ordering across most locations has also increased transaction frequency. Lastly, the Dutch Rewards program also contributed to customer retention as the business recorded a high percentage of transactions from members and record-high new memberships. Given the impressive results, management raised full-year revenue and EBITDA guidance. Zooming out, we think this was a standout quarter.
Dutch Bros is down 4.4% since the beginning of the year, and at $53.83 per share, it is trading 36.9% below its 52-week high of $85.37 from February 2025. 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 $1,468.
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