Shares of Sweetgreen, Inc. (SG) are experiencing a pre-market plunge of 5.17% on Friday, following the company's disappointing financial outlook for fiscal year 2025. The salad chain's stock is under pressure after releasing its first-quarter results and providing a cautious forecast that fell short of market expectations.

Sweetgreen lowered its 2025 revenue guidance to between $740 million and $760 million, down from its previous projection of $760 million to $780 million. This reduction, coupled with the announcement of approximately flat same-store sales change for FY25, has sparked concerns among investors about the company's growth prospects. Adding to the worries, Sweetgreen reported a 3.1% decline in same-store sales for the first quarter of 2025, indicating challenges in maintaining customer traffic and transaction values at established locations.

The market's reaction was further exacerbated by Morgan Stanley's decision to cut Sweetgreen's price target to $22 from $24, while maintaining an equalweight rating on the stock. Despite the company's efforts to improve efficiency through restaurant automation, including a proprietary automated salad builder, investors appear to be reassessing Sweetgreen's near-term growth potential and profitability in light of these developments. The pre-market plunge follows a 7% drop in after-hours trading on Thursday, suggesting that the market is adjusting its expectations for the fast-casual restaurant chain.