A lot happened to bar/restaurant/arcade Dave & Buster's ($PLAY) this week. Like, A LOT. First, the company suspended share buybacks and dividends buybacks. Then, they pulled a "poison pill" strategy where no one investor can own more than any other investor, which negates a hostile takeover, possibly a strategic move to fend off private equity buyers that are likely circling many consumer and retail companies looking to strike the deal of the decade. If that wasn't enough drama, the earnings call yesterday reported a fourth-quarter EPS of $0.80 cents per share, which beat estimates.
But the roller coaster has its ups and it has its inevitable downs. We are seeing the big drop about to come and there is just no stopping it. Dave & Buster's has a negative working capital due to buybacks and over $100 million in rental expenses, creating a difficult short-term financial picture. With social distancing, no one is coming into an arcade to touch games nor its restaurants to drink and eat. As brilliantly expressed in this article, this company is not built for the rough times ahead, and may not have the balance sheet to survive such a massive drop in foot traffic and store closures.
The first reason that positive earnings call didn't reflect our data is plain and simple: the stock price. It's easy to bash a company for looking at one line on a chart, and it's incredibly difficult to predict the future for any reason even using data, but the five thousand or so on staff right now are in danger of being furloughed, if you look at our next chart you'll see why.
The number of job openings at D&B has been rock solid for months, and then in March, it dropped. As of today, job listings have fallen 79%.
Worst of all, the Facebook ($FB) 'Were Here' count completely stopped growing as of mid-March, while the 'Talking About' count fell 96%. No one is talking about going, and no one is going, to their local Dave & Buster's. The data is damning, and we hope this global pandemic ends soon and every business and worker can get back up to full speed. We fear it won't for many.
About the Data:
Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales and app ratings - and creates data sets that measure factors like hiring, revenue and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.