Sweetgreen (SG) Plunges 1.80% on Earnings Shortfall, Legal Risks, Hits 15-Month Low

Sweetgreen Inc. (SG) shares plunged 1.80% on Thursday, marking a third consecutive day of declines with a cumulative drop of 7.89% over the period. The stock hit an intraday low of $8.34, its weakest level since May 2023, amid mounting concerns over financial performance and operational risks.

Analysts highlighted Sweetgreen’s projected earnings shortfall and legal challenges as key headwinds. The company is expected to report a quarterly loss of $0.16 per share, despite a 5.85% year-over-year revenue increase to $183.58 million. A discrimination lawsuit filed by New York City employees further intensified investor unease, exposing potential reputational and financial liabilities. The timing of the legal action, just weeks before earnings, has raised questions about management’s ability to navigate such risks.

Insider selling by top executives compounded skepticism. CEO Jonathan Neman and CFO Nicolas Jammet divested shares in late August and September, signaling internal uncertainty. While the hiring of former Chipotle executives was framed as a strategic move to boost efficiency, the leadership changes coincided with mixed analyst ratings. Royal Bank of Canada (RBC) maintained an “Outperform” stance, citing margin potential, but TD Cowen downgraded the stock to “Market Perform,” citing weak sales trends. The Zacks Consensus Estimate for earnings has fallen by 4.48% in the past month, reflecting deteriorating expectations.

Strategic initiatives, such as a collaboration with musician Reneé Rapp to promote a new salad line, aim to attract younger consumers. However, the company’s projected net loss of $0.71 per share for the fiscal year underscores persistent profitability challenges. With the restaurant sector ranked 184th out of 250+ industries by Zacks, Sweetgreen faces broader pressures from inflation, labor costs, and shifting consumer behavior. These factors, combined with mixed signals from insiders and analysts, have left the stock vulnerable to continued volatility ahead of its upcoming earnings report.