What Happened?

Shares of doughnut chain Krispy Kreme (NASDAQ:DNUT) fell 9.4% in the afternoon session after President Trump announced "reciprocal tariffs" on all US imports, set at a minimum rate of 10%. 

Markets reacted negatively to the announcement, reflecting deep concerns among investors about the broader economic implications. The tariffs were likely seen as a significant threat to global trade flows, with the potential to slow economic growth, drive up consumer prices, and spark retaliatory measures. 

Wedbush analyst Dan Ives captured the prevailing market anxiety, stating, "We would characterize this slate of tariffs as 'worse than the worst case scenario' the Street was fearing." His comment highlighted how the scope and severity of the tariffs far exceeded Wall Street's expectations, adding a new layer of uncertainty for businesses and investors.

The shares closed the day at $4.46, down 10% from previous close.

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What The Market Is Telling Us

Krispy Kreme’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was about 1 month ago when the stock dropped 26.1% on the news that 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 which weighed on investor sentiment.

Krispy Kreme is down 54.1% since the beginning of the year, and at $4.47 per share, it is trading 70.8% below its 52-week high of $15.33 from April 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 $212.85.

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