What Happened?
Shares of casual salad chain Sweetgreen (NYSE: SG) fell 5.3% in the afternoon session after Barclays lowered its price target on the stock to $8.00 from $10.00 while maintaining its "Equal-Weight" rating. The adjustment represented a 20% decrease in the anticipated stock price. The move appeared to reflect concerns about the company's financial health. Sweetgreen had faced challenges, including historical operating margin losses that pointed to an inefficient cost structure. Furthermore, its free cash flow margin dropped significantly over the previous year, which implied the company became more capital-intensive as competition picked up. These factors, combined with a short cash runway, increased the probability of a capital raise that could dilute existing shareholders.
The shares closed the day at $7.91, down 2.6% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Sweetgreen? Access our full analysis report here.
What Is The Market Telling Us
Sweetgreen’s shares are extremely volatile and have had 58 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 12 days ago when the stock dropped 4.3% 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.
Sweetgreen is down 75.4% since the beginning of the year, and at $7.90 per share, it is trading 82% below its 52-week high of $43.97 from November 2024. Investors who bought $1,000 worth of Sweetgreen’s shares at the IPO in November 2021 would now be looking at an investment worth $159.60.
Do you want to know what moves the business you care about? Add them to your StockStory watchlist and every time a stock significantly moves, we provide you with a timely explanation straight to your inbox. It’s free for active Edge members and will only take you a second.
