Olo's Potential Sale: A Culinary Tech Play or a Risky Gamble?

The stock market is a fickle beast—rumors of mergers, acquisitions, or sales can send shares soaring or sinking faster than a chef’s tiramisu sinks into a diner’s stomach. Today, we’re diving into Olo Inc. (NYSE: OLO), a restaurant software powerhouse, after whispers emerged that it’s exploring a potential sale. But before you bet the farm on this rumor, let’s dig into the facts, the numbers, and what this means for investors.

The Rumor Mill: Is Olo Up for Grabs?

A Refinitiv report claims Olo is “exploring a potential sale,” but here’s the catch: there’s no confirmation from Olo itself. Reuters even disclaims the story’s accuracy. So why the buzz? Olo’s software powers ordering systems for chains like Chipotle, Dutch Bros, and Wingstop, making it a juicy target in the $25 billion restaurant tech space. If true, a sale could fetch a premium—think private equity firms or tech giants (hello, Square or Toast) hungry to own a piece of this ecosystem.

But let’s not get ahead of ourselves.

The Fundamentals: Why Olo Could Be a Buy—Sale or No Sale

Olo’s Q2 2024 results were a slam dunk: 27.6% year-over-year revenue growth to $70.5 million, with a 120% net revenue retention rate—a metric that screams “client loyalty.” By Q4 2024, revenue hit $76.1 million, and gross payment volume (GPV) soared to $2.8 billion. Management raised full-year guidance to a $280 million revenue midpoint in 2024 and set a $333–$336 million target for 2025.

The company’s Olo Pay division is the real star. Partnering with FreedomPay, it’s expanding into in-store payments, aiming to capture $100 billion in GPV from existing clients. With 15 million borderless accounts and 86,000 active locations, Olo’s ecosystem is sticky—clients aren’t leaving.

The AI Edge: Why Olo’s Future Looks Saucy

Olo’s Engage platform isn’t just software; it’s a Swiss Army knife for restaurants. Features like AI-driven menu recommendations, real-time guest analytics, and catering tools have boosted average revenue per user (ARPU) by 12% year-over-year. Competitors like Toast and Uber Eats are nipping at Olo’s heels, but Olo’s 98% gross retention rate suggests clients are hooked.

The Risks: Don’t Let the Bacon Burn

Olo isn’t without warts. Scaling Olo Pay has compressed margins—non-GAAP operating margins dipped to 15% in Q4 2024 as upfront investments ate into profits. Plus, a $9 million class-action lawsuit settlement in 2024, while manageable, underscores the legal risks of rapid growth.

The Verdict: Buy the Stock, or Wait for the Sale?

Here’s the key takeaway: Olo’s fundamentals are strong, and its software is mission-critical. Even if the sale rumors fizzle, the stock’s 36% upside potential (based on analyst estimates hitting 2025 targets) makes it a compelling play.

If a sale does happen, investors could see a quick pop—private equity often pays a premium for software assets with recurring revenue. But even without a deal, Olo’s growth trajectory is clear: expanding Olo Pay, leveraging AI, and locking in more restaurants.

Bottom Line: Cook with Confidence

Olo’s stock trades at $6.25/share, a far cry from its 2024 peak of $9.35. With a “Moderate Buy” rating and a 22.1% jump post-Q2 results, this is a hold for the long haul—especially if you believe in the future of restaurant tech.

Final Call: Buy Olo now, but keep an eye on margins and competition. If the sale happens? Consider it a bonus.

“In investing, you make your money before you buy the stock. The buying isn’t when you make it. The making is made beforehand.” — Warren Buffett (and this column’s take on Olo).

Data Points to Remember:
- 2025 Revenue Target: $333–$336 million (up 15% YoY).
- Olo Pay GPV Goal: $100 billion by scaling existing clients.
- Analyst Upside: 36% to hit $9.35/share if targets are met.

Invest wisely, and keep an eye on that grill!