What Happened?

Shares of doughnut chain Krispy Kreme (NASDAQ:DNUT) fell 26.1% in the pre-market session after the company reported disappointing Q4 2024 results as it missed across all key metrics, including sales, operating profits, and earnings. Revenue fell 10.4% year on year, reflecting a decline in U.S. sales due to the Insomnia Cookies divestiture and the impact of a cybersecurity incident that cost an estimated $11 million in lost revenue. 

Looking ahead, Krispy Kreme's full-year revenue, EPS, and EBITDA guidance all fell short of Wall Street's expectations. Overall, this was a softer quarter, with weaker performance and cautious guidance weighing on investor sentiment.

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What The Market Is Telling Us

Krispy Kreme’s shares are quite volatile and have had 15 moves greater than 5% over the last year. But moves this big are rare even for Krispy Kreme and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 11 months ago when the stock gained 36.5% on the news that the company announced in a press release that it would provide fresh doughnuts daily at McDonald's restaurants nationwide (in the United States). 

According to the report, the Phased rollout will begin in the second half of 2024, with nationwide availability expected by the end of 2026. This is positive news for Krispy Kreme as the move should accelerate its sales velocity and eventually be accretive to revenue growth given the power of the McDonald's brand.

Krispy Kreme is down 28% since the beginning of the year, and at $7.01 per share, it is trading 59.6% below its 52-week high of $17.35 from March 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 $333.57.

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