Why Did Potbelly Plunge 13.58%? Earnings Miss, Activist Pressure

On May 1, 2025, Potbelly's stock experienced a significant drop of 13.58% in pre-market trading, reflecting a notable decline in investor sentiment.

Potbelly's full-year 2024 earnings report revealed a 5.9% decrease in revenue, which may have contributed to the stock's decline. Despite beating earnings per share (EPS) expectations, the overall financial performance did not meet market expectations, leading to a negative market reaction.

Marshall Wace LLP, a prominent investment firm, increased its stake in Potbelly by 758.4% during the fourth quarter, indicating a bullish outlook on the company's future prospects. This significant investment could be seen as a vote of confidence in Potbelly's long-term potential, despite the recent stock decline.

JPMorgan Chase & Co. also acquired a substantial number of Potbelly shares, further highlighting the interest from institutional investors. Benchmark reaffirmed a "buy" rating and set a price target of $16.00 for Potbelly, suggesting that the current stock price may be undervalued.

Activist investor Privet Fund Management has intensified its campaign against Potbelly, threatening to nominate directors at the company's annual meeting. This activist involvement could lead to strategic changes or a potential sale, adding to the uncertainty surrounding the stock's performance.