What Happened?
Shares of upscale bowling alley chain Bowlero (NYSE:BOWL) jumped 19.7% in the morning session after the company reported a "beat and raise" quarter. Third-quarter results exceeded analysts' revenue and EBITDA expectations. In addition, Bowlero slightly lifted its full-year revenue guidance.
The improvements recorded in the quarter were driven by increased customer spending, the strong performance of Raging Waves Water Park from expanded season passes, acquisitions, and expansion to new locations.
Overall, we think this was a very solid quarter in a consumer discretionary space that has seen uneven results this quarter, with some apparel retailers, restaurants, and others reporting shortfalls vs expectations.
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What The Market Is Telling Us
Bowlero’s shares are very volatile and have had 23 moves greater than 5% over the last year. But moves this big are rare even for Bowlero and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock dropped 20.4% on the news that the company reported first-quarter results with revenue, adjusted EBITDA, and EPS, all missing Wall Street's expectations. Gross margin also fell significantly during the quarter. The company attributed the weak top line performance to bad weather conditions, in line with the narrative highlighted by some of its peers during the earnings season. Overall, this was a weak quarter for Bowlero.
Bowlero is down 19.3% since the beginning of the year, and at $11.81 per share, it is trading 21.2% below its 52-week high of $14.99 from February 2024.
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