The company’s Q2 results missed expectations.
Dave & Buster’s Entertainment shares fell over 17% in premarket trading on Tuesday, following the company’s quarterly results, which missed Wall Street’s expectations.
During Monday’s after-hours trading, the restaurant and arcade chain reported adjusted earnings of $0.40 per share for the second quarter, down from $1.12 a year earlier, and below analysts’ consensus estimate of $0.92.
Revenue in the three months ended Aug. 5 rose modestly to $557.4 million from $557.1 million a year ago, also missing the $562.8 million expectation. Comparable store sales decreased 3%.
“We were negatively impacted in the second half of the quarter by the July 4 holiday falling on a Friday this year versus a Thursday in the prior year,” CFO Darin Harper said in the analyst call, adding that there was also a one-off legal expense.
However, Q2 revenue increased after three straight quarters of declines, giving investors some relief. The restaurant sector has been under strain for months as consumers cut back on dining out and experiences in a high-inflation environment.
Dave & Buster’s is an entertainment and dining chain that combines a full-service restaurant and sports bar with an extensive arcade, known as the “Million Dollar Midway.” It also operates in Canada and Puerto Rico.
In July, the company appointed Yum Brands veteran Tarun Lal as its CEO.
On Stocktwits, retail traders saw the drop as a buying opportunity, with the retail sentiment climbing multiple notches higher in the ‘extremely bullish’ zone as of early Tuesday, compared to the previous day.
“$PLAY Thinking of starting a long position tomorrow based on what appears to be strong over reaction to disappointing earnings… Could be a good LEAPS play,” a user posted.
If the premarket drop extends into regular trading, it could potentially result in the stock’s worst session since December. Shares of Dave & Buster’s gained about 10% over the past three sessions in the run-up to the earnings report.
As of the last close, PLAY stock is down 13.4% year-to-date.
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