What Happened?
Shares of beauty and waxing service franchise European Wax Center (NASDAQ: EWCZ) jumped 15.8% in the morning session after the company reported third-quarter 2025 financial results that surpassed Wall Street's expectations on profit and revenue. Although revenue declined 2.2% year on year to $54.2 million, the figure still topped analysts' forecasts. The company's profitability was a key highlight for the quarter. GAAP earnings per share of $0.09 was more than double the consensus estimate of $0.04. Furthermore, adjusted EBITDA, a key measure of profitability, came in at $20.2 million, handily beating expectations of $15.7 million. While the company reaffirmed its full-year revenue outlook, its full-year EBITDA guidance was slightly below analysts' projections. Overall, the strong bottom-line performance appeared to outweigh the mixed guidance, driving investor optimism.
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What Is The Market Telling Us
European Wax Center’s shares are extremely volatile and have had 47 moves greater than 5% over the last year. But moves this big are rare even for European Wax Center and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 19 days ago when the stock gained 3.1% on the news that a cooler-than-expected inflation report fueled optimism for potential Federal Reserve rate cuts. The September Consumer Price Index (CPI) rose 3.0% year-over-year, coming in just below the 3.1% analysts had forecast. While still above the Federal Reserve's 2% target, investors interpreted the slight cooling as a sign that inflationary pressures may be easing, potentially giving the central bank room to consider interest rate cuts in the near future. Sectors that are typically sensitive to interest rates, such as real estate and utilities, saw a notable lift. Lower rates can reduce borrowing costs and increase the appeal of dividend-paying stocks, boosting investor confidence in these areas.
European Wax Center is down 34.4% since the beginning of the year, and at $4.18 per share, it is trading 49.6% below its 52-week high of $8.28 from November 2024. Investors who bought $1,000 worth of European Wax Center’s shares at the IPO in August 2021 would now be looking at an investment worth $195.18.
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