Toast (TOST) Shares Plunge 1.81% as Price Cuts and Leadership Shifts Spark Margin Concerns

Toast Inc. (TOST) shares fell 1.81% on Wednesday, marking a fifth consecutive day of declines as the stock hit its lowest level since May 2025. Intraday losses reached 2.45%, with the five-day drop totaling 11.16%. The selloff reflects broader concerns over the restaurant technology provider’s strategic and operational challenges.

The recent stock weakness follows Toast’s aggressive price reductions for software packages targeting smaller restaurants. Monthly fees for "Core" and "Growth" offerings were cut by 26–58% across hardware types, raising alarms about margin sustainability. Analysts noted these cuts were aimed at low-volume customers, a segment less central to Toast’s core business, and highlighted intensified competition, including rivals offering hardware incentives to attract clients.

Insider activity further weighed on sentiment. Key executives and institutional investors, including Macquarie Group and Korea Investment CORP, sold shares in late August and early September. While some institutional buyers like ARK Investment Management and Charles Schwab added to positions, the mixed signals underscored uncertainty about management’s ability to navigate pricing pressures and retain profitability.

Leadership changes added to the volatility. CEO Steve Szilagyi stepped down on September 5, with co-founder Adam Buss returning as interim CEO. The abrupt transition sparked mixed reactions, with analysts suggesting short-term instability could persist as the market evaluates the new leadership’s strategic direction. Meanwhile, Toast announced a new solution for cafés and bakeries in late August, aiming to diversify revenue streams, though its impact on near-term growth remains unclear.

Brokerage ratings offered a mixed outlook. UBS upgraded TOST in early September, citing potential in the SMB restaurant POS market, while Baird and Bloomberg highlighted risks from margin compression. Despite institutional investments and Toast’s recognition as a top workplace, the stock remains under pressure as investors weigh the balance between affordability for small businesses and long-term profitability.