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Why Krispy Kreme (DNUT) Stock Is Down Today

ⓘ This article is third-party content and does not represent the views of this site. We make no guarantees regarding its accuracy or completeness.

DNUT Cover Image

What Happened?

Shares of doughnut chain Krispy Kreme (NASDAQ: DNUT) fell 0.8% in the morning session after the company announced it sold its remaining stake in Insomnia Cookies for approximately $75 million. 

The divestment fully concludes Krispy Kreme's investment in the cookie company, a move aimed at strengthening its financial position. CEO Josh Charlesworth highlighted the sale as a "decisive action to de-leverage our balance sheet and drive sustainable, profitable growth." The company intends to use the cash from the sale, after fees, to reduce its debt. This allows it to focus on its core opportunities: expanding in the U.S. and growing its international franchise business. 

Adding to the positive sentiment, the company also launched a new "Harry Potter: Houses of Hogwarts" doughnut collection and a Labor Day promotional deal.

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What Is The Market Telling Us

Krispy Kreme’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 previous big move we wrote about was 2 days ago when the stock dropped 6.6% on the news that JPMorgan downgraded the stock to 'Underweight' from 'Neutral', citing significant risks in its turnaround plan. 

The investment bank expressed concerns about high execution risks, declining U.S. business trends, and challenges associated with refranchising multiple international assets. JPMorgan also highlighted Krispy Kreme's substantial debt, with over $1 billion in net debt compared to its equity market capitalization of roughly $650 million. The downgrade follows the company's recent wider-than-expected quarterly loss and the announcement of a new turnaround strategy. According to the brokerage, these underlying issues limit the visibility of the proposed plan's success.

Krispy Kreme is down 63.8% since the beginning of the year, and at $3.53 per share, it is trading 71.6% 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 $167.86.

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