Krispy Kreme stock price has become highly volatile lately as it has become one of the top meme companies. DNUT initially jumped from the July low of $2.53 and reached a high of $5.7.
As it always happens, meme stock gains don’t last long, and the shares have now plunged to the current $3.50. So, will the newly launched donuts in collaboration with Warner Bros boost its stock?
Krispy Kreme and Warner Bros. discovery partnership
The main catalyst for the Krispy Kreme stock price this week was the unveiling of a partnership with Warner Bros. Discovery Global Consumer Division. It launched a donut collection inspired by some of its characters like Harry Porter, Hogwarts Houses, and the School of Witchcraft.
The new donuts collections will on sale starting on Monday and will be there for a limited amount of time. They will be available in three flavors, including Gryffindor, Slytherin, and Hufflepuff. The chief branding officer said:
“We’re channeling the beloved magic of Harry Potter and the Houses of Hogwarts. But the magic is fleeting, and so are these doughnuts, so don’t miss your chance to try them!”
The company hopes that the new products will help to boost its sales, and its struggling stock price, which has tumbled by over 80% from its highest point last year.
DONUT growth has deteriorated
The most recent results showed that the company’s business deteriorated in the secon quarter. Its quarterly sales dropped by 13.5% YoY to $379 million as demand for its products slumped.
The sales also plunged because of its partnership with McDonald’s, the biggest business in the industry. This partnership ended on July 2nd, with management attributing the elevated costs. Also, the sales fell after the company sold Insomnia Cookies in a $64.2 million deal.
The operating loss increased to $436 million due to partnership issues. Its net loss soared to $441 million from the $4.9 million it lost in the same period last year.
It is now in a turnaround strategy that focuses on boosting its presence in the US and its capital-light international division. It hopes to refranchise its business, expand margins by outsourcing logistics.
Krispy Kreme is not followed by many Wall Street analysts. The average estimate is that its revenue will be $381 million in the third quarter, with an annual figure of $1.54 billion.
Still, there are signs that investors are not buying th turnaround measures as its stock has plunged and short interest moved to 14%.
Krispy Kreme stock price analysis
The weekly chart shows that the DNUT stock price has crashed in the past few months, moving from a high of $17.52 in 2024 to $3.50. It has remained much lower than the 50-week and 100-week moving averages.
Worse, the stock has formed a bearish flag pattern, a popular continuation sign. Therefore, the stock will likely continue falling as sellers target the key support at $2. A move above the resistance point at $4 will invalidate the bearish outlook.
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