Build-A-Bear (BBW) Plunges 15.54% as Tariff Woes and Analyst Downgrade Spur Sell-Off

Build-A-Bear Workshop (BBW) plunged 15.54% in pre-market trading on December 5, 2025, marking its sharpest decline in months amid investor concerns over trade policy pressures and revised analyst expectations.

The selloff followed a DA Davidson analyst cutting the price target to $70 from $85 while retaining a “Buy” rating. The adjustment reflects lingering uncertainties despite the company’s strong Q3 performance, which included record revenue and expanded retail locations. However, the analyst’s downward revision signaled caution about near-term hurdles.

Trade tensions intensified as Build-A-Bear’s Q3 results highlighted the drag from tariffs. The company’s CFO noted that elevated tariffs, particularly on Chinese imports, eroded margins and will persist through 2026. While revenue rose 2.7% to $122.7 million, gross margin dipped due to $4 million in tariff-related costs, underscoring the challenge of offsetting higher import duties without passing costs to consumers.

Despite robust international expansion and a thriving Mini Beans product line, the stock’s sharp decline underscores market skepticism about the company’s ability to navigate a protracted trade war. Investors appear pricing in extended headwinds as the firm balances cost controls, selective price adjustments, and supply chain renegotiations to mitigate ongoing tariff impacts.