What Happened?

Shares of burger restaurant chain Red Robin (NASDAQ:RRGB) jumped 34.1% in the afternoon session after the company reported strong fourth-quarter 2024 results: Same-store sales beat expectations after a few tepid quarters. The sales boost was driven by a 9% menu price increase, which helped offset a continued decline in guest traffic. Red Robin's full-year EBITDA guidance was particularly strong, significantly exceeding analysts' forecasts. Overall, this quarter had a few things to like.

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What The Market Is Telling Us

Red Robin’s shares are extremely volatile and have had 54 moves greater than 5% over the last year. But moves this big are rare even for Red Robin 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 17.6% on the news that the company reported weak second-quarter 2024 results. Although revenue beat, adjusted EBITDA missed expectations and margin declined year on year. Guidance was bad and a big reason why shares are down. The company lowered its full-year revenue guidance, and adjusted EBITDA guidance for the same period missed expectations. Management attributed the weak results to a slowdown in the restaurant industry, which more than offset internal initiatives to accelerate growth. Overall, this was a weak quarter.

Red Robin is up 3.2% since the beginning of the year, but at $5.85 per share, it is still trading 34.2% below its 52-week high of $8.89 from June 2024. Investors who bought $1,000 worth of Red Robin’s shares 5 years ago would now be looking at an investment worth $218.61.

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