What Happened?
Shares of restaurant company Cheesecake Factory (NASDAQ: CAKE) fell 5.3% in the afternoon session after the company reported mixed third-quarter 2025 financial results, with a revenue miss overshadowing an earnings beat.
The company's revenue grew 4.8% year on year to $907.2 million, but this fell slightly short of Wall Street's expectation of $911.9 million. While its adjusted earnings per share of $0.68 comfortably beat analyst estimates of $0.60, investors appeared more focused on signs of slowing momentum. A key area of concern was the company's same-store sales, which were flat compared to the same quarter last year, marking a significant deceleration from historical growth. Additionally, the total number of restaurant locations declined to 364 from 375 a year prior. The combination of a revenue miss and stalling same-store sales growth prompted investor concern about the company's near-term outlook.
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What Is The Market Telling Us
The Cheesecake Factory’s shares are somewhat volatile and have had 12 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 19 days ago when the stock dropped 3.3% 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.
The Cheesecake Factory is up 3.2% since the beginning of the year, but at $50.05 per share, it is still trading 27% below its 52-week high of $68.51 from July 2025. Investors who bought $1,000 worth of The Cheesecake Factory’s shares 5 years ago would now be looking at an investment worth $1,672.
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